2023

INTEGRATED REPORT( A N N U A L R E P O R T)

Edited, published, and inquiries accepted by:
Hokkoku Financial Holdings, Inc.
PR & IR Section, General Planning Department
2-12-6 Hirooka, Kanazawa, Ishikawa
920-8670 Japan
Tel: +81 (76) 223-9705
Published in July 2023
This booklet is also available on the Company website.
https://www.hfhd.co.jp/english

Together into the future2023
INTEGRATED REPORT(ANNUAL REPORT)Contents
1

Greetings on the occasion of publication
Company proﬁle0 1 S tor yGreetings on the Occasion of Publication
Thank you for your ongoing support of Hokkoku Financial
Holdings. We are pleased to announce the publication ofIntegrated Report 2023.
As a “next-generation integrated regional company,” weaim to develop our businesses in a wider range of domains
than before, and grow together with our local community

4

Corporate philosophy, Brand philosophy, Slogan

5

20 guiding principles

6

History of Hokkoku Financial Holdings

8

Financial Highlights

9

Non-Financial Highlights

10

Message from the President

16

Sustainability Policy and Materiality

Company Proﬁle18

Value Creation Process

Name: Hokkoku Financial Holdings, Inc.

through strengthened communication and collaboration.
We kindly request the continued support and patronageof our customers, shareholders, and local residents.
July 2023

Head oﬃce: 2-12-6, Hirooka, Kanazawa, Ishikawa, Japan

0 2 S t rat egy

Established: October 1,2021

22

Message from the General Manager of General Planning Department

Number of employees: 2,131 (including business staﬀ)

23

Medium- to Long-Term Business Strategy

Total number of shares outstanding: 26,908 thousand shares

28(1) Financing Based on an Understanding of Business Prospects

34(2) Consulting and Advisory

46(3) Progress in Cashless Payment and Digitalization

60(4) Expansion of Investment Business

66(5) Further Sophistication of Market Operations

70(6) DX and System Modernization

78(7) Initiatives for Human Capital-Oriented Management

Share capital: ¥10.0 billion

Number of shareholders: 10,478(As of March 31, 2023)

0 3 Envi ronmen t & Gover na nc e
104

Environmental Initiatives

108

Corporate Governance

118

Risk Management System Initiatives

120

Compliance Initiatives

122

IR Activities, Group Company Information

124

Group Financial Data, Group Non-Financial Data1

01
S t oryCorporate philosophy

Trust ― a bridge to a
fruitful regional future
Enrich interaction and growth in the region

20

guiding
driving forces behind our continuous innovation. With this in
we have outlined in these guiding principles theprinciples mind,
character and actions expected of our employees.
Our corporate philosophy and brand philosophy are theTo establish our brand1. We will act to accomplish our unanimous objective, which, we declare, is to enrich peopleʼs lives andcreate a better society.

2. We are professionals, and we will always think of ways to make things possible before giving
reasons why they cannot be done.

3. Each of us will act with a sense of ownership to support innovation in the entire region.

To continue innovation
4. We will build a long-term relationship of trust with our customers, cherishing the sharing of common
values with them.

Brand philosophy

Hokkoku Financial Holdings exists to act
for the beneﬁt of people and the world,
enrichingthe lives of individuals
and society as a whole.

5. We will think from a customer-centered perspective, engage in discussions, and continuously
provide various types of added value.

6. We will derive optimal solutions through continuous communication with our customers, rather thansimply accepting their requests.

7. We will collaborate with our customers and all other stakeholders and demonstrate leadership tocreate new values.

8. We will value having the attitude to constantly learn new things and to think thoroughly.

9. We will realize work styles that are fulﬁlling to each of us, based on mutual understanding andrespect for any diﬀerences and diversity.

10. We will support the success of our colleagues, in full understanding that cooperation is the bedrockof our organization.

Our basic principles
11. We will never engage in an act that betrays the trust of our customers, in full understanding thatsuch trust is what supports us.

12. We will greet our superiors, subordinates, and colleagues in a pleasant manner, never forgetting a
sense of gratitude.

Slogan13. We will welcome our customers pleasantly, paying attention to oﬃce beautiﬁcation, always
maintaining cleanliness in the workplace, and actively working to keep things tidy and clean.

14. We will respect each other as work partners, and eliminate any forms of harassment, including

sexual harassment and bullying, from the workplace, acknowledging that harassment is an act ofhurting the dignity of human beings.

15. We will promptly consult and report any mistake, trouble, complaint, etc. arising in the course ofbusiness and never engage in an act that violates laws and regulations or internal rules, such as
making a false statement or falsifying a document.

16. We will lead our lives within our means, refrain from extravagance, and never misappropriate fundsof customers or the Company.

17. We will abide by our rules on use of emails, social media, and other online tools, with full

Together into the future

understanding that information sent via the Internet can never be retrieved.

18. Driving under the inﬂuence of alcohol is a social evil, and we will never engage in or let others
engage in such an act.

19. We will deal with any anti-social forces in a resolute manner.

20. We will engage in environmental conservation activities to protect the environment, which is thefoundation of our lives and businesses.

4

5

｜History of Hokkoku Financial Holdings｜
1943‑1999

2000‑2014

As the leading bank in the Hokuriku
region, we have sought to become abank trusted and loved by thepeople in our local community bydemonstrating leadership in various
regional activities under our
corporate philosophy, “Trust‒abridge to a fruitful regional future.
Enrich interaction and growth in theregion.”In 2000, we began branch
consolidation and other reforms
to raise our operational eﬃciency.
Since then, we have promoted
strategies to provide services withgreater speed while maintaining
quality, advanced internal
reforms, and laid the groundwork
for a corporate culture that is
unafraid of changes.

1943

2000

Hokkoku Bank established

Introduced an area-speciﬁcsales system
Began branch consolidation
Created a call center

2007

Established the Information
Systems Department and began
strategic investment into systems

2009

Integrated General Aﬀairs
Department into the Planning
Department to strategicallyreduce non-personnel costs

2010

Established The Hokkoku
Management, Ltd.
Introduced a credit line system(as a strategic credit initiative andfor speedy response)
Reduced administrative tasks
for loan operations, centralizing
work at the headquarters

2011

Established The Hokkoku
Servicer, Ltd.

2012

Began using tablets to sellﬁnancial products

2014

New head oﬃce building
completed

2022‑

Further strengthened card,
leasing, and consulting
businesses to resolve regional
issues, mainly leveraging ourconsulting functions

Established the holding
company, Hokkoku Financial
Holdings, to oﬀer new value tothe region as a “next-generation
integrated regional company”

Leading the communityʼsevolution into a quality region by
oﬀering new services based on
customer-driven concepts

We launched our consulting business in2015. To address the changing needs of ourcustomers, we have promoted strategies
crafted from a customer perspective. In
2019, we established a number of newcompanies to enter non-banking businessdomains. We have also promoted digitaltransformation internally and worked toraise employee awareness regarding
productivity enhancement.

We promoted in-house development ofinnovative systems, as represented by
the operation of Japanʼs ﬁrst fullbanking system that runs on a public
cloud service. On October 1, weestablished the Hokkoku Financial
Holdings to contribute to our region by
maximizing group synergies.

2015

Introduced a new core banking
system, BankVision
Launched the consulting business2016

Distributed Surface laptops andsmartphones to all employees
Opened the Singapore Branch
Began free distribution of card
terminals
Became the ﬁrst domestic bank tooﬀer card settlement services foraﬃliated merchants

2017

Began handling corporate Visa debit
cards

2018

Began handling the trust business2019

Opened the COREZO e-commercemall
Announced a project to migrate corebanking system to the cloud
Began handling Hokkoku Cloud
Banking

2/2021

Launched the HOKKOKU LIFE+
service

Began reviewing in-housedevelopment of a new-type ATM

5/2021

Established The FD Advisory, Ltd.
Began operation of BankVision on
Azure, Japanʼs ﬁrst full banking
system on a public cloud6/2021

Established The CC Innovation, Ltd.
Established The QR Investment, Ltd.

7/2021

Hokkoku Bank and Visa jointly
launched the Super Cashless Region
project
Created the Noto SDGs Fund

9/2021

Obtained DX certiﬁcation (Hokkoku
Bank)

10/2021

Established Hokkoku Financial
Holdings, Inc.

11/2021

Prototype of in-housed developed
ATM completed

12/2021

Introduced a sales department
systemIn 2022, we introduced a new
carrier-oriented personnel system tofoster talent that can help raise thequality of our region. In 2023, we started
planning the circulation of a
blockchain-based regional currency in thecity of Suzu, Ishikawa Prefecture. We
continue to support regional developmentby oﬀering new services throughcollaboration with the municipalities.

3/2022Introduced a new personnel system
Launched the HOKKOKU LIFE+ PRIME
service
Certiﬁed as a White 500 company underthe 2022 Certiﬁed Health & Productivity
Management Outstanding Organizations
Recognition Program (Hokkoku Bank)

Established The Digital Value, Ltd.
Established the Hokkoku DX
Cashless Fund6

strengths

Ability totransform
corporate
cultureExpertise inoperational
reforms

01

4/2022

Established The COREZO, Ltd. (renamed
from The Hokkoku Management, Ltd.)
Established The BPO Management, Ltd.
Obtained DX certiﬁcation (Hokkoku FHD)

7/2022Customercentric
strategies

Launched the COREZO TRAVEL lodging
reservation website

10/2022

Eliminated commissions on purchases of
all investment trust products

11/2022

For new loans, removed personal
guarantee obligations by business owners

1/2023

Began reviewing project to build anext-generation regional digital platform
Received the Human Capital Leaders2022 award

3/2023

Certiﬁed as a White 500 company underthe 2023 Certiﬁed Health & Productivity
Management Outstanding Organizations
Recognition Program
Received the Minister of Regional
Revitalization award at the 13th“Companies that Deserve to be Valued
the Most in Japan” Awards

4/2023

10/2020

Our
cultivatedHistory of Hokkoku Financial Holdings

Took on challenges,
always being mindful ofquality, speed, and cost2021

St o ry

Trust nurtured over many
years and stable customer
base

2015‑2020

Began reviewing circulation of digitalregional currency in Suzu, Ishikawa

6/2023In-housesystemdevelopment
capability

Ability tofosterprofessional
talentAbility toenhanceorganizational
capabilities

Established The FDAlco, Ltd. (through mergerof The FD Advisory, Ltd. and ALCOLAB, Ltd.)

7

｜Non-Financial Highlights｜

Income (Hokkoku Bank, non-consolidated/Consolidated)

Environmental, social, and governance (ESG) factors

Core net operating proﬁt, ordinary proﬁt, and proﬁt(Hokkoku Bank, non-consolidated)(¥ bn)

ＣＯ２ emissions（t）

Ordinary proﬁt

Proﬁt

Ta rge t

18.0
15.6

13.2 12.7

12.1 11.9

13.0

11.7 11.2

9.6

9.0

8.0

6.6

FY2018

9.3

8.5

7.3

9.0

FY20206.7
7,808 7,489

FY2018 FY2019 FY2020 FY2021 FY2022

FY2022

FY2021

Capital adequacy ratio
Tier 2 (¥ bn)

Tier 1 ratio (%)

Core capital (¥ bn)

12.3 11.24

ROE (%)＊

10.30
14.8 9.65

252.1

221.6

5.0 %
FY2031 8.0 %FY2023

Targets

265.2

10.81

245.4

4.1

3.4

4.1

87.27

3.9

15,94137

FY2019FY2020

FY2021FY2019Number of users (month)

FY2021

FY2022FY2017FY2018 FY2019 FY2020 FY2021 FY2022

Visa debit cards issued(cumulative total; ʻ000)

Utilization rate (%)

84.27

134,858

84.44
23,751283
240

104,360

17,499

206

50.3

49.44

158

39.88

3.1

FY2020

14.6

41

40

20.46 20.58

FY2018

13.9

324

85.02

226.0

FY202211.7

FY2018 FY2019 FY2020 FY2021 FY2022

26,048FY201817.6

Use of internet banking
for individual customers

Utilization rate (%)

21,103
10.08

5,245

FY2015 FY2017 FY2019 FY2021 FY2022

12.61

37.8 11.41 40.9

5,569

Number of users (month)

Capital adequacy ratio (domestic standard)(%)

13.04

11.78

6,148

Use of internet banking
for corporate customers

Capital adequacy ratio (international standard)(%)

20.3

91

59

Capital adequacy ratio and ROE (consolidated)

Tier 1 (¥ bn)

−100%

8.7

Women in management
positions（%）/energy saving subsidies (deals)

versus FY2013 level

5.9

FY2019Leases subject to ＣＯ２

Financial Highlights / Non-Financial Highlights

Core net operating proﬁt

Proﬁt (consolidated)(¥ bn)

01
St o ry｜Financial Highlights｜

FY2019FY2021

FY202232,286

47,691FY2015 FY2017 FY2019 FY2021

FY2022FY2018 FY2019 FY2020 FY2021 FY2022＊On the basis of domestically active banks

Loans outstanding and yields

Strategic shareholdingsbalance (￥ bn)

Loans outstanding (by loan type)(¥ bn)
Business loans

Consumer loans

1318.01275.71000.681014.6＊Listed shares held by Hokkoku Bank (book value)

Yields (by loan type)(%)

Local public entities/corporations

1206.01016.8

315.2

313.5

322.8

March 31, 2021

March 31, 2022

March 31, 2023

22.0

Business loans
Consumer loans
Local public entities/corporations

1.237
0.854
0.519

FY2019

1.168
0.840

0.379
FY2020Independent outside directors

1.139
0.819

1.152
0.799

0.304

0.284

FY2021

FY202220.0

June 2015

June 2023

Independent
outside directors

Independent
outside directors

318.75%

18.1
13.8

5
55%

11.4

16

directors

9

Female directors
June 2023

2

femaledirectors（22％）

directors

FY2018 FY2019 FY2020 FY2021 FY2022

9

｜Message from the President｜

Hokkoku Financial Holdings will mark its second
anniversary in October 2023, and Hokkoku Bank̶thelargest of the Groupʼs 11 subsidiaries̶will celebrate its
80th anniversary in December. In the ﬁscal year ended
March 31, 2023, we recorded ¥8.7 billion in consolidated
proﬁt after tax and were able to distribute cash dividendsof ¥100 per share. We owe these results to thelong-standing trust extended by our customers,
shareholders, employees, and many other stakeholders,
and would like to express our sincere gratitude.
In the current ﬁscal year, Hokkoku Financial Holdings
looks to record an annual proﬁt after tax of ¥11.0 billion
and distribute cash dividends of ¥110 per share. To breakfree from the three-year socio-economic stagnation
caused by the spread of COVID-19, our management andemployees will continue to collectively tackle theimpending challenges as we pursue our new businessmodel. On May 8, 2023, we unveiled an updated versionof the medium- to long-term business strategy. I am
proud to say that the updated version presents a
substantially higher-resolution blueprint of our new
business model. As CEO, my greatest mission is to bringthis new business model to cruising speed over the next
two to three years.

Looking back at the holding company
structure
With the advent of the Reiwa era in 2019, we saw clear
and substantial changes in our customersʼ needs. And
after the pandemic, the environment surrounding various
businesses changed dramatically, across industries.
Hokkoku Bank adopted a holding company structure inorder to respond to its customersʼ needs in a speedy andattentive manner. There is no continuity to a businessmodel heavily weighted toward devoting management
resources to the lending business̶a model based on
logic drawn from the suppliersʼ perspective without theessence of being customer-driven. Our move was basedon such a judgement. Financial business that involves
just simple money lending and settlement will face
further digitalization and become commoditized. Thus,
we aspire to elevate the professional skills of ourmanagement and employees, collectively achievebusiness growth through consulting and advisory services
to corporate and individual customers, and help enrich
the lives of each individual. At the same time, we want todevelop a business model unattainable by AI. To theseends, we decided to establish a holding company (anintegrated regional company) truly suitable for the newera. Hokkoku Bank has embraced the corporate

10philosophy, “Trust‒a bridge to a fruitful regional future,”
over the past 80 years. At the juncture of our shift to aholding company structure, we additionally introduced
the brand philosophy: “Hokkoku Financial Holdings
exists to act for the beneﬁt of people and the world,
enriching the lives of individuals and society as a whole.”
The brand slogan ̶“Quality Company, Good Company” isthe declaration of our commitment to taking action.
While our journey continues, we have received numerous
accolades in various ﬁelds over the past two years. These
include the DX Certiﬁcation, Human Capital Leaders2022 award, and Minister of Regional Revitalization
award at the 13th “Companies that Deserve to be Valued
the Most in Japan” Awards. I am conﬁdent we are making
steady progress in implementing our business strategy.

Message from the President

Shuji Tsuemura
President & Chief Executive Oﬃcer
Representative Director

01
St o ry

Sparking Innovation with Added
Value-Driven Management and ESG

From three to seven strategic pillars
In updating our medium- to long-term business strategy,
we added four new initiatives to the existing priority
measures in the card, consulting, and leasing
businesses, designating a total of seven priority areas.
(1) In the previous ﬁscal year, we began an internal
test run of our new internet banking system for corporate
customers. All development work will be completed thisﬁscal year, and a full-scale launch is slated for next year.
In this project, in addition to revamping the systemdesign, we revisited the fundamental thinking behind thedesign and substantially bolstered security. This system
is a public cloud-based internet banking service forcorporate customers, the ﬁrst of its kind in Japan. We
expect it to vastly improve convenience and operability.
According to our plan, in just a few years, the accounting
staﬀ at our customer companies will be able to complete
their bank-related accounting work right on this system.
At Hokkoku Bank, as well, the system will dramaticallysave labor associated with the processing of loans andlease transactions.
(2) In consulting and advisory services, we will take ona segment-speciﬁc approach, covering corporate
customers both in the Hokuriku region and beyond. In
June 2023, FD Advisory merged with ALCOLAB, Ltd.,
which is headquartered in Tokyo. As an investment
advisory ﬁrm under the name FDAlco, this company will
step up asset management advisory services to individual
customers, corporations, and ﬁnancial institutions.
(3) In the area of cashless payment, we will start a new
digital regional currency project in addition to our brandcard initiatives centered on Visa. We plan to introduce
services this summer, and stable coins based onblockchain technology should be ready for use by the end

11

｜Message from the President｜

Driving force behind the new businessmodel(5) Over the past decade or so, the Market Departmentof Hokkoku Bank has secured stable income, without
being swayed by the market environment. Rather thanjust investing in Japanese government bonds, thedepartment has worked to carry a diversiﬁed portfolio
while stringently managing associated risks. Moving
forward, we intend to raise our operations in the market
to a more sophisticated level so that we can determine
expected returns and risk tolerance with even greater
clarity and engage in sustainable and stable investments.
(6) By implementing digital transformation ahead ofother companies, we were able to make steady progressin our ﬁrm-wide reform. Our major systems-related
investments have already run their course for the mostpart. We have a very clear image of our strategy, which is
to make thorough use of public cloud services while
reducing systems-related costs. Moving forward, we
intend to further incorporate new technology andarchitecture, and achieve systems modernization at anaccelerated pace.
(7) While managing our businesses in a progressive
and proactive manner, we have implemented multiple
measures simultaneously to enhance our risk
management and compliance. ESG is also at the centerof our management priorities, and we are working to
expedite our actions. On the environmental front, we
intend to accomplish our goal for CO₂ emission
reductions ahead of schedule, now seeking to reacheﬀectively zero emissions in 2030. We also plan to build
bases that qualify for “Nearly ZEB” or “ZEB Ready”
certiﬁcations and speed up the introduction of electricvehicles (including hybrid vehicles) to our operations. To
strengthen our human capital, we have implemented
measures in a number of areas. We updated our
personnel system to stay abreast with the times,

12

The speed at which the new business model takes root
hinges on our corporate culture and the mindsets of ourmanagement and employees. In short, what counts iswhether we can adamantly take actions based on our
corporate philosophy and brand philosophy. Without ourﬁrm commitment to making customers the starting pointof our operations, the business model of Hokkoku
Financial Holdings would not have a meaning. Nor could
we become a sustainable company. In this sense, ourmanagement ideology can be deﬁned as the pursuit ofadded value and ESG.
Of course, business management focusing on added
value and ESG is easier said than done, and we havespent vast amounts of time thus far in implementing avariety of speciﬁc measures. The phrase “removal ofsales quotas” is often used to describe our sales strategy.
The real objective here is to accomplish a major shift inour sales strategy, switching our focus from volume toquality, and to added value. To eliminate all obstacles
hampering our added value-driven management, wehave made various eﬀorts to reduce the extensive
amount of time and labor spent on things that are notdirectly related to our customers. Breaking away fromquotas was only one of these eﬀorts. We are working toeliminate the concept of budgets as well as meetings set
up for the sake of securing consensus in advance. We arepushing forward on digitization, digitalization, andreskilling, and eﬀorts are under way to reset peopleʼs
mindsets and change the corporate culture. We havedecided to focus on KPIs, delegate authority, ensuretransparency within the organization, and invest in
intellectual capital (personnel system in a broad sense).
All these initiatives are intended to drive forward ourmanagement approach centered on added value and ESG.
Amid these activities, I have noticed ﬁrsthand thatthorough commitment to our corporate philosophy andbrand philosophy has transformed some management
and employee behaviors. It is a self-evident truth within
our Group that investment in recurrent education andreskilling helps reset our peopleʼs mindsets, and leads tothe improvement of our organizational capabilities. As
the quality of internal communication improves, ourcorporate philosophy and brand philosophy will gain
further footing, encouraging our management team andemployees to exert their power in actions that generate
added value. I am also conﬁdent that this leads to theevolution of concepts behind our products and services.
Such “redevelopment of organizational capabilities” iswhat lies behind our initiatives, which are often
considered progressive. To date, we made eﬀorts toremove personal guarantee obligations by businessowners. We completely eliminated the base handlingfees of internet banking users (corporate andindividuals), the remittance fees for transactions
between Hokkoku Bank branches, and commissions onpurchases of investment trusts. We also distributed card
payment devices free of charge. Moving forward, we willcontinue to further enhance the convenience of our
products and services with strong momentum. As you
can see, our branding eﬀorts begin with internalbranding. Going forward, our ﬁve in-house designers̶allwell-versed in these types of internal branding̶will beworking together with the marketing strategy team tobolster external branding as well.
Rather than just passively acceding to reforms led by
the Tokyo Stock Exchange, we are actively embracing
eﬀorts to enhance our corporate value. As one of theleading companies in our regional economy, we are also
accelerating ESG-related initiatives. Speciﬁcally, in
addition to dissolving cross-shareholdings, we plan toraise the level of dialogue with companies in which we
hold shares for pure investment purposes. With theintroduction of performance-linked compensation for ouroﬃcers and a restricted stock program for our
employees, our management team and employees now
share the same viewpoint as our shareholders. Added
value-driven management requires the fullunderstanding and consent of our management teamand employees as well as our customers. I believe thesharing of metrics such as ROE and PBR among ourentire team of management and employees, whilepursuing customer-centric businesses, will boost ourpeopleʼs motivation to generate results. Further
improvement in internal communication has
substantially contributed to the betterment of external
communication that calls for sincere engagement withour customers and investors. In my view, this has led to ahealthy sense of mutual focus in our communications
and greater attention to enhancing governance.
Ideas that are meticulously thought out from thecustomersʼ perspective encourage the evolution andgrowth of our customers and serve as a catalyst for theevolution and development of the local community. In themedium to long term, they will sharpen the sensitivity of
our management and employees, ensure long-term
proﬁts, and contribute to the lasting presence of
Hokkoku Financial Holdings.

commitment. At the same time, we are encouraging
members of our community to jointly take part in these
initiatives.
Human capital is an integral component of all
business. Therefore, we must step up our eﬀorts to foster
highly skilled professionals, as it is our duty as a leading
company to develop human resources for the region atlarge. Governance is the driving force behindsafeguarding and enhancing the quality of business
management. This ﬁscal year, we are working once again
to improve the quality of deliberations at our Board of
Directors meetings. Starting this fall, we plan toimplement new measures to reﬁne our succession
planning, and improve the quality of discussions at theNomination and Compensation Committee meetings
with a view to further enhancing governance. Recently,
our eﬀorts have often been associated with words like “
proactive management,” “challenge-driven businessdevelopment,” and “moves of the ﬁrst penguin.”
Third-party comments aside, every challenge must bebacked by an advanced risk management and compliancestructure. For this reason, integrity is what we emphasize
the most when we hire and utilize personnel. Our workentails more than just maintaining psychological safety,
promoting a ﬂat organization, working in an agile manner,and ensuring transparency. In addition to pandemics like
COVID-19, we now face more risks than ever, including
those associated with earthquakes, landslides,
information leaks, system failures, external attacks on
systems, and instability in the ﬁnancial and capital
markets. Accordingly, we also deploy resources toconstantly improve our defense as one organization.

01
Message from the President

discontinued the performance-based award program,and created a support system that promotes recurrent
education and reskilling among the employees. We also
took steps to create a work friendly environment. We willcontinue to respect the career plans of employees withdiverse sense of values and further support theirlearning. By doing so, we hope to foster management
talent capable of becoming a driving force within ourcompany and the local community at large, and thereby
further contribute to regional growth. In governance, todate, we have implemented a number of measures aheadof schedule. For instance, we clariﬁed the details
regarding the operation of our Board of Directors andNomination and Compensation Committee, the missionof independent outside directors, and succession
planning, and revised the executive compensation
system. From the current ﬁscal year, our Board has nine
directors, with six being Audit and Supervisory
Committee members. Discussions are under way tofurther strengthen governance from next year onward,
and we plan to introduce new measures as early as in thelatter half of the current ﬁscal year.

St o ryof the year. Our aim is to improve productivity of theregion as a whole by further raising the cashless payment
ratio, while at the same time enhancing eﬃciency andconvenience of public services through linkage with the
My Number identity veriﬁcation system.
(4) In the investment business, we began originating
funds dedicated to corporate revitalization over a decadeago. We have already raised approximately ¥7.0 billion
through Fund No. 3 and supported the revitalization of 20
companies. We are actively structuring other funds suchas those for startups and companies in their growthphase, as well as for businesses in the Noto area, and arelooking to achieve a total investment balance of ￥100.0
billion in 10 yearsʼ time.

In closing
Lately, the phrase “Japanʼs three lost decades” is oftenfeatured in various media. To break away from thisstagnation, companies must take on the challenge ofadopting new business models. We believe suchchallenges go beyond companies in metropolitan areas.
In fact, as one of the leading companies in the regional
economy, we consider this challenge to be our mission.
Beyond that, we must accelerate communication andcollaboration, and spark innovation not only within ourGroup but also in the region at large, as this is our true
purpose. In recent years, we are seeing clear signs ofprogress that point to vast possibilities. I have reaﬃrmed
my resolve to create a new future together with ourcustomers, shareholders, management and employees,
and other stakeholders.

Toward ESG evolution
Environmental issues present serious challenges to the
Earthʼs survival. This is a common understanding within
our Group. As a leader in our region, we intend toproactively engage in various initiatives with strong13

｜Message from the President｜Ayour ﬁnancing functions, credit costs,
etc.?

In our eﬀorts to understand business prospect, we
simultaneously seek to understand the business
operations of our customers and improve ourrelationships with them. In this way, we can share acommon vision on where our customers ought to be (=their issues), and work alongside them to resolve issues.
These eﬀorts are reﬂected in our response to customersʼ
fundraising needs. We work Group-wide to propose
optimal ﬁnancing methods (loans/leasing) and oﬀer
terms that are appropriate for the use of funds. Also, we
have been able to provide ﬁnancing that does not rely on
excessive collateral and guarantees.
For credit costs, we changed our method of recording
allowance for loan losses, taking into consideration our
understanding of business prospect and our relationships
with the customers, in addition to the ﬁnancial
information and other data we have referred to frombefore. As a result, our books are more in line with reality.
➡ P. 28（1）Financing based on understanding ofbusiness prospect

have laid out the formula̶“increase
Q You
in client count” × “increase in fees perclient”̶as your fundamental strategy inthe consulting business. What speciﬁc
initiatives do you have in mind?

A

To date, we have mainly provided management
consultation to customers with whom we hadstanding relationships, such as our borrowers. Moving
forward, we plan to increase consultations forcustomers who have no transaction history with ourbank, as well as those whose relationships with us are
weak despite past banking transactions. To this end,
we will expand customer touchpoints throughpromotions centered on consulting as well as
seminars hosted together with chambers ofcommerce and other external organizations. We alsoplan to expand the customer base by developing our

14

01
Message from the President

have your eﬀorts so far to
Q How
understand business prospect aﬀectedconsulting capability in urban areas and obtaining
customer referrals from external partners, including
other ﬁnancial institutions. To increase the amount offees received per customer, we will expand ourbusiness domains and build a framework for solving
all manner of issues in order to address the multiple
challenges our customers face. We will oﬀer our
wide-ranging knowledge and experience accumulated
through our eﬀorts to date, based on a fee structurethat matches the value received by our customers.
➡ P. 34（2） Consulting & advisory

St o ry

In the following section, I would like torespond to inquiries on our seven priority
areas in a Q&A format.

services. What kind of
Q cashless
initiatives, including a digital regional

Competitors are also releasing variousAcurrency, does Hokkoku FHD have instore to drive the progress of cashlesstransactions in your region?

We launched the digital regional currency
project to increase uptake by oﬀering othermethods of cashless payment in addition to the Visa
debit card. Our goal is to raise the cashless payment
ratio in the region from nearly 40% to over 90%. We do
not want to eliminate the services of our competitors.
Rather, we hope to see progress in the adoption of
cashless payment throughout the region by giving
people options suitable for various settings.
The digital regional currency is a stablecoin, whichuses the digital certiﬁcate of My Number cards, alongwith blockchain and other new technologies at low
cost. We expect beneﬁts such as improved public
services for residents accompanying the digitalizationof municipalities, and reduced fee burden forbusinesses. We envision this currency being used for
digital salary payments and the settlement ofaccounts between companies. This can streamline
the process of matching bank transfers with invoices,and enhance local productivity. We hope to work as
one with everyone in the region, including municipal
bodies and ﬁnancial institutions, to promote uptake.
➡ P. 46（3）Progress in cashless and digitaladvisory ﬁrm ALCOLAB
Q Investment
was integrated into your Group in JuneA

2023 to form FDAlco. What synergies
do you expect from FDAlco?

Since its founding, the integrated ALCOLAB,
Ltd. has supported business model reforms byregional ﬁnancial institutions. More speciﬁcally, it has
provided investment advice focusing on global asset
allocation, helped strengthen the operational structureof regional ﬁnancial institutions to make securities
investment a core business for them, and supported theintroduction and use of the risk appetite framework.
The core functions and specialist talent associatedwith our Groupʼs market operations will beconsolidated at FDAlco, which is the new post-merger
company. By combining Hokkoku FHDʼs businessbase and ALCOLABʼs expertise, we will work tofurther elevate the levels of our market operations andrisk management.
We also intend to transcend regional and existing

business boundaries to provide full-ﬂedged investment
advisory services to individuals, general corporations,and regional ﬁnancial institutions. While the integral
service is investment advisory, we plan to provide a
consulting service that takes advantage of the diverse
capabilities of Hokkoku FHD. In such a way, we will oﬀer
various solutions to our customersʼ management issues.
We will also develop training programs for investment
advisory specialists, making every eﬀort to foster
professional talent capable of meeting customer needs.
➡ P. 34（2）Consulting & advisory➡ P. 66（5）Further sophistication of market
operations

QA

You have announced the intent to widen
the scope of investment to companies
across Japan and overseas in a bid to
expand the investment business. What is
the signiﬁcance and purpose of investingin areas outside the Hokuriku region?

Hokkoku FHD has grown together with the
Hokuriku region, and the region will continue tobe the main destination of our investments. That said,
limiting our scope to Hokuriku will not lead to further
growth of our investment business. QR Investment
must therefore aggressively go outside the region inpursuit of further growth. We ﬁrmly believe that if we
can bring back the fruits of “outside” success to ourregion, we can make Hokuriku a quality region.
➡ P. 60（4）Expansion of investment businesshave plans for a variety of system
Q You
development projects. How do youAplan to use AI to improve productivity?

Generative AI, most notably ChatGPT, isbeginning to have a profound impact on theworld of system development.

To improve development productivity and quality,
we also began using AI to automatically generate
programming codes and ﬁx bugs in our projects todevelop a corporate internet banking service and aninternal web system. However, so far, we haveidentiﬁed beneﬁts only in a few standardized program
areas. We look forward to further evolution of AI. We
also plan to utilize AI to train new engineers, by having
it generate model codes and using it in technical Q&A.
➡ P. 70（6）DX and system modernization

to the personnel system,
Ｑ Inyouupdates
have revised the method ofAdetermining compensation andchanged the retirement allowancesystem. You now subsidize expenses
incurred on recurrent education andreskilling as well. What eﬀects haveyou seen so far from such measures?

The introduction of a new carrier-oriented
personnel system has certainly raised our
employeesʼ awareness toward self-driven careerdevelopment. Some 85% of our employees are engaged
in some type of learning, and are working diligently toaccomplish their career plans. Thanks to this, we areseeing a steady increase in the number of personnel
with specialized knowledge and the ability to generate
ideas in a wide range of business areas. These people
will not only contribute to our Group but also move on to
manage businesses in the region, playing a vital part in
the “human resource ecosystem” we are aiming for.
Moving forward, the Groupʼs business domains willgrow further in both breadth and depth, and our
employees will be required to have broader and moresophisticated skill sets. Accordingly, we will continue tosupport our employeesʼ eﬀorts to build their careers.
➡ P. 78（7）Initiatives for human capital-oriented
management

15

｜Sustainability Policy and Materiality｜
Sustainability Policy01
St o ry

Hokkoku Financial Holdings seeks to realize a sustainable society together with the local community and all other stakeholders byactively working to resolve environmental, social, and governance (ESG) issues through its business activities.

Extraction of issues

Analysis and draft preparation

Discussions

Decision-making by management

Understanding the external
environment and social
trendsConsidering the expectationsof business partners andinstitutional investors

Systematically sorting out theissues (handled by the General
Planning Department)
Checking consistency with ourmanagement

Launching cross-departmental
projects to narrow down issues, andsorting out risks and opportunities
Discussions at the Strategic
Committee meetings attended
by executive oﬃcers andaboveinstitutional investors

Resolution at the Board of
Directors meeting

Materiality (priority issues)E(environmental)（1）

Response to climatechange,environmental
conservation（2）

Contribution to regional
economic revitalizationS(social)（3）

Development of humanresources capable ofsupporting regionʼsquality enhancement

G(governance)

16

（4）

Improvement ofmanagement transparency
through dialogues withshareholders and investors

Risks

Application to business activities

Disclosure of targets and results

Proceeding to speciﬁc
initiatives by reﬂecting
materiality in our medium- tolong-term business strategy,
etc.

Setting KPIs in line with themedium- to long-termbusiness strategy
Disclosure of results

Opportunities

Speciﬁc initiatives

Credit cost increase due to worsening corporate
performance resulting from delayed responses totechnological innovation for a carbon-free society andbehavioral changes of investees and borrowers
Opportunity losses due to lack of solutions oﬀered toinvestees and borrowers
Erosion of stakeholdersʼ trust due to insuﬃcient
response to climate change; deterioration of
corporate brand

Cultivation of environmental awareness in the region
through leadership in environmental conservationeﬀortsProvision of consulting that leads to solutions forclimate change and environmental conservation
Corporate brand enhancement through the handling ofclimate-related information and promotion of disclosure

Environmental conservation eﬀorts through our corebusinesses
Reduction of environmental impact through corporate activities;
tree planting, thinning, and other reforestation eﬀorts
Addressing climate change under the framework of TCFD
recommendations
Supporting customersʼ migration to a carbon-free society
through consulting
Contributing to a recycling-oriented society through lease transactions

Declining competitiveness as a result of lagging progressin corporate culture reforms due to continued adherence
to a traditional, volume-driven business model
Credit cost increase due to the declining
competitiveness and ﬁnancial performance of regional
companies due to their inability to improve productivity
Stagnation of local economy from the lack of progress inasset building and eﬀective asset use among local
customers due to low ﬁnancial literacy
Declining competitiveness of our services resulting
from inadequate response to progress in cashlesstransactions and digitalization

Contribution to regionʼs quality enhancement eﬀorts throughbusiness model and corporate culture transformation
Development of consulting and advisory services aimed
at sharing and resolving issues based on theunderstanding of customersʼ business prospect
Heightening awareness regarding signiﬁcance of asset
building and management, eﬀective use of assets, andinheritance/asset succession planning in light of theaging society and the “era of centenarians”
Regulatory reforms such as making the NISA scheme permanent
Rollout of cashless and digital strategies to circulate
funds and improve productivity in the region

Supporting growth through private equity investments
Contributing to productivity enhancement throughcollaboration with regional public entities
Demonstration of consulting and advisory functions
Supporting life-stage planning and asset building; providing
ﬁnancial education, including in the workplace
Contributing to the creation of a digital and cashless society
Maintaining stability of ﬁnancing functions

Deterioration of value oﬀered to the region becauseof declining customer service quality due toinadequate training of personnel
Exodus of personnel due to the work environment
and lack of attractive HR strategy; lagging strategy
execution due to shortage of human resources

Provision of highly value-added customer services
through development of professional personnel and useof diverse talent
Penetration of corporate brand through eﬀorts toimprove engagement; bolstered organizational strength

Introduction of a career-oriented personnel system suitable forautonomous career development
Development of professional talent through recurrent
education and reskilling
Expanding ﬁelds where female employees and mid-career hires can thrive
Further improvement of the work-life balance
Energizing the organization by utilizing the employee
engagement survey
Developing a sense of ownership through introduction of astock granting plan for all employees
Expressing our respect for human rights to all stakeholders(establish Declaration of Human Rights)

Deterioration of management transparency due toinadequate eﬀorts to understand shareholder andinvestor needs and lack of active information disclosure
Decline in internal productivity due to lack ofdigitalization eﬀorts
Loss of public trust owing to inadequate corporate
governance and system risk management, and lack of
security measures

Understanding of shareholder and investor needs
through in-depth dialogue leveraging IR activities thatemphasize face-to-face meetings; reﬂection of such
understanding in our management strategies andinformation disclosure
Reinforcement of our ability to execute strategies
through group-wide reforms starting with digitaltransformation (DX) and system strategy

Visualization of internal information and deliberation processes
through corporate transformation using DX
Promote operational eﬃciency
Corporate governance structure
Risk management system and compliance
Capital strategy

Sustainability Policy and Materiality

Materiality Identiﬁcation Process

17

｜Value Creation Process｜To fulﬁll our corporate philosophy, we will provide new value to the region and help create a sustainable society
the community over the years and the comprehensive strengths of individual group companies.

INPUTS

Business modelManagement Capital(March 2023)(FY2025)

Consulting andadvisory

Human capital［P. 34 ］

les based on
ma
d ro
n
te
a
s
r
e

INPUTS

Improvementof regional
and in-houseproductivity

Response toprogress indigitalization andenhancement ofcompetitive
power

Iss
u

Intellectual capital

y
lit
ia

Seven pillars basedrengths and cu
s
r st
t
om
ou
e
on

Response todiversifying
customerneeds

concepts
nted
rie
r-o

・Employees : 1,880
・Employees engaged inlearning : 1,605
・Digital talent : 99

・Individual customers :1.11 million (approx.)
・Corporate customers :0.13 million (approx.)
・Office network
92 locations in Japan
6 locations overseas
・Internet banking contracts
Individuals :262 thousand (approx.)
Corporate :28 thousand (approx.)
・Trust and confidence
nurtured over the years［P. 60 ］［P. 66 ］

Initiatives for humancapital-oriented
management［P. 78 ］

Management foundation supporting business¥18.1 billion

Core
KPIs

(P. 27)Proﬁt¥11.4 billion

For the local
community
We contribute to thebetterment of regionʼsquality by continuously
working to create innovation.

We support corporate growthand enrich the lifestyles ofindividual customers throughour products, services, andexpertise-based proposals.

For our shareholders
and investors
We improve corporate value
through our group companiesʼ
eﬀorts to develop the local
community.

Furthersophistication ofmarket operations［P. 70 ］

・Electricity consumption :9,945 thousand kWh
・CO₂ emissions :5,245 tons

Ordinary proﬁt［P. 46 ］

Expansion of
investment
business

Generated value

For our customers

Progress incashlessand digital

DX and systemmodernization

Natural capital

18

Medium- tolong-term
targets［P. 28 ］

・Deposits :¥4,384.1 billion
・Core capital :¥226.0 billion

Social relationshipcapitalOUTPUTS

Financing based onunderstanding ofbusiness prospect

Financial capital・Comprehensive strengthsof group companies
・Expertise based on
20 years of organizational
reforms

future, enrich interaction and growth in the region

Value Creation Process

Trust ‒‒ a bridge to a fruitful regional01
St o ry

Corporate philosophy

through our value creation process, making full use of various capital, including the trust we have earned from

Income fromprioritybusinesses¥39.1 billion

ROE

5% or higher

For our employees
Building on our
career-oriented personnel
system, we support thediverse work styles of ouremployees and create anenvironment where they can
attend to their work with asense of fulﬁllment.

activities

19

02

S t rategy

｜Medium- to Long-Term Business Strategy｜
Message from the General Manager of General Planning Department

Medium- to long-term business strategy 2023

Measures to enhance corporate value

2. Expansion of priority
business areas(From three pillars to seven)

Add digital regional currency, investment advisory,investment funds, and market operations to the previous
three priority business areas (card, loans and leasing, andconsulting), and increase income to ¥49.8 billion in ﬁve years(up approx. ¥11.0bn from FY2022 that ended March 31, 2023)

Tomohiko Kikuzawa
Managing Executive Oﬃcer,
General Manager
of General Planning Department

In May 2023, we unveiled our updated medium-to
long-term business strategy, in which we expanded ourpriority businesses from three areas to seven. The newareas are those we have worked on internally for sometime. We decided to add them as new business pillars
since we now have a much clearer image of theirrespective road maps, thanks to our work thus far. By
stepping up our eﬀorts in these seven areas withgreater momentum, we aim to achieve consolidated
proﬁt of ¥18.4 billion in ﬁve years (in FY2027, ending
March 31, 2028) and ¥26.9 billion in 10 years (inFY2032).
Alongside our business strategies, since last year, wehave worked on several initiatives to improve ourcorporate value. We disclosed a plan for large-scale
share repurchases, indicated ROE targets, andintroduced performance-linked compensation (basedon ROE) for our management and employees. We also
set forth a policy to eliminate strategic shareholdings,
aiming to sell 50% of such holdings by March 2025. In
May 2023, we expressed our intent to achieve a PBR of
1x or above as well. We will continue accelerating oureﬀorts to enhance corporate value by maintaining the
hybrid approach of customer-centric businessdevelopment and a shareholder-oriented capital
strategy.
We ﬁrst announced a plan to raise the total return
ratio from 40% or above to 50% or above, assuming atarget capital adequacy ratio of around 10%, and toraise cash dividends from ¥100 to ¥110 per share. In
May, as in last year, we started a share buyback
program for repurchases up to ¥9.0 billion. In termsof ROE-linked compensation, we completed our ﬁrst
share deliveries to our employees (in the amount of¥340 million) in March and to our oﬃcers (¥97 million)
in July.
Our target capital adequacy ratio up to the previous
plan was 8%. However, in the latest update, we raised
this to 10%, considering bond price ﬂuctuations fromrecent changes in interest rate trends. As of the end of

22

March 2023, the overall valuation diﬀerence on our
securitie holdings was a net gain, but we posted
unrealized losses on our bond holdings due to higher
interest rates. We will certainly review the interest rate
trends and reassess our portfolio. That said, given theinterest rate environment, we decided to set our target
capital adequacy ratio at 10% or above before considering
unrealized losses on securities, and 8% or above afterfactoring in such losses. We believe this is a level that
ensures sound ﬁnancial health, and will use it as a
guide in our daily eﬀorts to explore new business areas
and make eﬀective use of capital.
Particularly in the investment business, we plan toexpand our total investment balance to about ¥100.0
billion in 10 years. Also, with the ﬁnalization of Basel III,
we see the need for additional capital allocation to thesecurities department as we approach 2025.
Meanwhile, should there be no new investments aside
from those currently anticipated, we will likely allocate
the capital accumulated over time to share
repurchases and dividends. Therefore, we will consider
share buybacks on an ongoing basis, bearing PBR and
our capital adequacy ratio in mind.
Our assumption on cost of capital is 7%. We will seek
to achieve an ROE of 7% or higher in ﬁve years (inFY2027 ending March 31, 2028) and 8% or higher in 10
years (in FY203) based on the business and capital
strategies updated at this time. In such a way, we hope
to meet the expectations of our customers, the local
community, and our shareholders.
To accomplish this, all companies of the Hokkoku
FHD Group must gather their wisdom, thinkcollectively, and create new value throughcommunication and collaboration with our diverse
partners. I ﬁrmly believe that consistently taking
actions that are in line with our corporate slogan“Quality Company, Good Company. Together into the
future” can lead to the achievement of our corporate
philosophy, “trust̶a bridge to a fruitful regional
future.”Key points of the updated plan

Medium- to Long-Term Business Strategy

1. Improvement of capitaleﬃciency

Raise the total return ratio to 50% or higher, in our basic
policy on shareholder returns
Continue share repurchases (¥9.0 billion in FY2023)
Maintain capital adequacy ratio at around 10%, and directterm proﬁt and capital surplus to new business investments
and shareholder returns

02
S t ra tegy

Toward enhancementof corporate value

Since 2021, we have updated our plan each ﬁscal year to reﬂect our latest target performance levels andstrategies for the medium to long term. In the period from April 2023 to March 2026, we will focus onestablishing our new business model.

01
St o ry

Medium- to long-term business strategy̶updated plan

Improvement of capital eﬃciency
We will use surplus capital to strengthen shareholder returns and investment into new businesses while
maintaining a capital adequacy ratio of around 10%.
Our aim is to raise ROE to over 7% in the ﬁfth year and achieve 8% at an early stage.

Expansion of priority business areas❶ Integrated operation of lending
and leasing

Improve speed and raise eﬃciency through ﬁnancing basedon understanding of business prospect and digitalization via
internet banking❷ Consulting and advisory

Develop segment-speciﬁc approach that transcends
coverage of municipalities and the Hokuriku region
Strengthen investment advisory, providing asset
management solutions to individuals, general corporations,and ﬁnancial institutions❸ Progress in cashless

Raise the cashless payment ratio by promoting the usage ofcards and a digital regional currency❹ Expansion of investment
business

Substantially expand investment size, regions, and target
industries❺ Further sophisticationof market operations

Manage risks, aiming for expected return of around 2%, andimprove proﬁtability❻ Digital transformation (DX)and system modernization

Improve quality and reduce costs by developing thenext-generation banking system and advancing in-housedevelopment strategies❼ Strengthening ESG initiatives

Invest more resources in human capitalStrengthen governance and environmental initiatives

23

｜Medium- to Long-Term Business Strategy｜

Target performance levels for the medium to long term ＊As announced on May 8, 2023

■We will direct surplus capital to new strategic investments while maintaining acapital adequacy ratio of around 10%.
(￥ bn)

Medium- to long-term levels we envision based on our future environmental
outlook and initiative policies.

FY2025

Total capital 286.4

Total capital

Subordinated
bonds

Core
capital
238.7

20.0

Risk assets 2,271.5＝12.6％

1: Only includes publicly
announced share repurchases.
2: Dividends are calculated using
announced estimates throughFY2023 (ending March 31,2024), and amounts derived
assuming an annual total return
ratio of 50% or more for theyears thereafter. Actual
dividend amounts from FY2024
onward have not been
determined and are notguaranteed.

Controlling
capitalallocation

Unrealized gains (losses)
on available-for-salesecurities(36.7)
Subordinated bonds (20.0)
Proﬁt (FY2022‒2025) +42.5
Share repurchase ＊1 ( ” )(18.0)
Dividends＊2 ( ” )(17.5)
Issuance of restricted
shares+2.0

Risk assets

Risk
assets2,476.5286.4

2,271.5

Loans
Securities
Funds (QRI)
Arena construction
Hirooka Terrace(Head oﬃce and building for lease)Core
capital255.7＝around10%(65.0)
+20.0
+80.0
−
+20.0

Risk assets

Risk
assets2,796.5

2,271.5＝around10%

Loans(85.0)
Securities+220.0Funds (QRI)+200.0Arena construction +20.0
Hirooka Terrace+20.0(Head oﬃce and building for lease)
Strategic investment +150.0

Hokkoku BankFY2023(In 1 year)

Ordinary proﬁt (consolidated)

16.0

16.7

18.1

28.3

40.4

Proﬁt (consolidated)

8.7

11.0

11.4

18.4

26.9

Income from priority
businesses (consolidated)

38.8

35.1

39.1

49.8

60.0

ROE (consolidated)*

3.9%

5.0％

BCP-related
reserve, etc.

Consolidated
core capital

Risk
capitalRisk
capitalCredit risk
Risk on loans, etc.

Stock price ﬂuctuation risk

Investment partnership risk

Investment trust priceﬂuctuation risk

Other credit risk

Investment partnership risk

Operational risk

Hokkoku General Leasing, Hokkoku Credit Service, etc.
Buﬀer

Balance of strategically held listed
shares (¥ bn)
Valuation gains/losses
Investment book value[Reference: Based on shareholdersʼ equity]
ROE (consolidated)

49.3

66.0
40.4

31.7

28.6

28.2

28.4

3/20133/20163/20173/2018

41.1

22.0

20.0

3/20193/20207% or higher

FY2032(In 10 years)

8% or higher

4.0%

5.1％

5% or higher

7% or higher

8% or higher(￥ bn)FY2022
ActualFY2023(In 1 year)

FY2025(In 3 years)

FY2027(In 5 years)

FY2032(In 10 years)

38.8

35.1

39.1

49.8

60.0

Business loans and leasing

14.8

14.8

16.0

16.2

16.7

Cashless

1.4

1.7

2.6

4.0

8.9

Consulting and advisory

1.0

2.0

3.1

4.0

6.2

Investment advisory

0.1

0.2

0.5

0.8

1.1

Investment funds

0.2

0.4

0.7

8.5

10.1

Market operations

21.2

16.1

16.1

16.3

16.9

Other income (consumer loans, etc.)

14.5

17.0

17.4

19.1

20.2

Credit costs

6.2

3.0

3.0

3.0

3.0

Expenses

31.0

32.4

35.4

37.6

36.8

6.8

6.9

6.2

6.2

4.8

16.0

16.7

18.1

28.3

40.4

Item

Ordinary proﬁt
29.7

5% or higher

FY2027(In 5 years)

Target performance levels for the medium to long term (detailed
breakdown, consolidated) As announced on May 8, 2023

Of which, system costs*
38.0

FY2025(In 3 years)＊ Calculated as ratio of proﬁt attributable to owners of parent to Basel Ⅲ core capital applicable to domestically active banks

Priority businesses

Market risk
Interest rate risk

■Since 2009, we have sold cross-held shares (in ﬁnancial institutions, insurancecompanies, etc.) on an ongoing basis.
■Based on our plan to halve the investment book value by the end of March 2025 (versus
March 2022), we reduced our holdings by ¥2.4 billion in one year (progress rate of 35%).

24

FY2022
ActualIn the absence of new strategic investments, corresponding core
capital will be allocated to dividends and share repurchases.

Reduction of strategic shareholdings

27.9

Item

286.4

Unrealized gains (losses)
on available-for-salesecurities(36.7)
Subordinated bonds (20.0)
Proﬁt (FY2022‒2027) +73.0
Share repurchase ＊1 ( ” )(18.0)
Dividends＊2 ( ” )(35.0)
Issuance of restricted
shares+6.0

Strategic investment +150.0

Hokkoku Financial
Holdings GroupWe control risk-taking
by allocating risk
capital in considerationof the level ofconsolidated core
capital relative to thecapital adequacy ratio.

Total capital(￥ bn)

02
Medium- to Long-Term Business Strategy

Unrealized gains(losses) on
available-for-salesecurities
36.7

FY2025

S t ra tegy

FY202101
St o ry

Capital utilization

Total of software development costs (depreciation) and running costs (administrative outsourcing expenses, etc.)

38.6

41.0

18.1

13.8

11.4

9.2

3/2021

3/2022

3/20233/20246.9

3/20250
Future25

｜Medium- to Long-Term Business Strategy｜

Main KPIs■We target a total return ratio of 50% or above.
■We will achieve an ROE of 8%, above our cost of capital of 7%, and aim for a PBR of 1.0x.

In the process of formulating the medium- to long-term business strategy, our business departments
deﬁned their individual visions for connecting with customers and the local community. We have adopted
speciﬁc actions to accomplish such visions, and the numbers of transactions generated through therealization of such visions, among other indicators, as our KPIs.We review these KPIs as necessary,referring back to monthly performances and deliberating on issues and actions that require improvement.

FY2023(In 1 year)

Total return ratio

122%

115％

Total dividends￥2.6 billion￥2.7 billion

Share repurchases￥8.1 billion￥9.9 billion

FY2025(In 3 years)

FY2027(In 5 years)

FY2032(In 10 years)

Total return ratio of 50% or higher
We will regularly review and conduct share repurchases
and dividend hikes, while considering the capital
adequacy ratio and strategic investment opportunities.

Cost of capital

7.0％

ＲＯＥ

3.9%

5.0％

5.0% or higher

7% or highe

8% or higher

Core capital￥226.0 billion￥223.8 billion￥238.7 billion￥255.7 billion￥300.0 billion

Risk assets￥2,240.2 billion￥2,205.0 billion￥2,476.5 billion￥2,796.5 billion￥3,000.0 billion

10.1%

10.1％

0.5

0.6x or above

Capital adequacy ratio
PBR

Calculated based on capital asset pricing model(CAPM)
Market risk premium of 7.5%

Medium- tolong-termbusiness strategy
items

Financingbased onunderstandingof businessprospect

0.7x or above

1.0x or above

1.0x or above

ROE = profit attributable to owners of parent ÷ core
capital(Basel Ⅲ domestic standard)■All employees are granted shares in line with our ROE determined as per our ROE
calculation standard.

Progress incashlessand digital

Total performance-linked compensation granted to oﬃcers and employees(assuming monthly salary amounts and personnel structure in 2023)

1% or higher, 2% or higher, 3% or higher, 4% or higher, 5% or higher, 6% or higher, 7% or higher,
8%
but lower
but lower
but lower
but lower
but lower
but lower
but lower
or higher
than 2%than 3%than 4%than 5%than 6%than 7%than 8%
80

150

230

300

380

450

450

450

Restricted
stock

10

80

160

230

310

410

590

770

Employee
restricted stock

−

(＊)

170

350

350

＊ Includes the directors and executive oﬃcers of Hokkoku FHD and all Group companies

26(￥ mm)

MonetaryOﬃcersOur visions

Performance KPIs

Financial KPIs

KPIs

FY2021
ActualFY2022
Targets

FY2022
ActualFY2023
Targets

FY2025
Targets

Number of core clients

791

1,463

1,215

1,470

1,950

Yield (during the FY)(%)

1.139

1.157

1.152

1.196

1.325

Number of lease customers

3,916

4,200

3,875

4,000

4,200

331

460

438

650

800

Number of investment trusts,
Omakase Navi, and 401k accounts

44,54548,00043,43546,35052,350

Number of contracts for
testamentary trust, estate
settlement, and investment advisory

95

180

106

123

247

Number of Visa debit card
members (ʻ000)

239

315

278

320

400

Visa debit card usage ratio (%)

41.7

48.0

39.3

40.0

40.0

Number of card aﬃliatedmerchants (stores)

6,872

7,900

6,628

7,000

7,400

Number of investments made byfunds (managed by QR Investment)

5

17

23

23

15

Amount of investments madeby funds(managed by QR Investment)(¥ bn)

0.2

0.8

10.5

.
7.3

19.0

Number of contracts(CC Innovation)
Consulting andadvisory

Performance-linked compensation

ROE level

Action KPIs

Around 10%◉ROE calculation formula◉ Capital cost assumed at 7%

Actions

700

1,500

2,200

3,000

Expansionof investment
business

Environmental
and humancapital-oriented
management

CO₂ emissions by
the Group (tons)

5,569

̶

5,245

̶

zero
（ in FY2030）

Women in management
positions (%)

17.6

̶

20.3

̶

50%
（ in FY2030
）

66

̶

73

̶

100

Total costs on human resource
development (annual)(¥ mn)

02
Medium- to Long-Term Business Strategy

FY2022
Actual

S t ra tegy

Item

01
St o ry

Shareholder return policy and ROE and PBR targets

Eﬀectively

27

02

Haruhiko Kometani

S t ra tegy

Managing Executive Oﬃcer,

General Manager of Corporate Banking Department

The Hokkoku Bank, Ltd.

（1）

Resolution of issues based on anunderstanding of business prospects

is nothing more than mere “push style sales.” We
believe that true sales can only be achieved through theproper understanding of customer businesses andorganizational structure, and to this end, we work
continuously to share a common notion with ourcustomers regarding their issues and needs.
For this, we engage in daily activities to improve ourrelationships with customers. In fact, these activities
are at the very root of our corporate sales.
As we engage in dialogues with our customers to“understand business prospects,” we gain informationon their business models, supply chains, and businessplans. Based on this information, we discuss their ideals
for the future. If their issues involve ﬁnancing, we help
them ﬁnd a solution by proposing a loan or a leasearrangement as a one-stop shop.
Generally speaking, many customers go to a bank for̶Financing as one means of resolving issues̶
The ﬁrst step in corporate sales at Hokkoku Bank is todevelop a deep understanding of customer businesses.
In our Group, we call this the “understanding of businessprospect” (generally known as “business prospectassessment”), and we continuously devote our eﬀorts
into this task, positioning it as the starting point of allactivities.
Why do we put so much eﬀort into understanding
business prospect? The answer is because it is
impossible to uncover the true issues and needs of ourcustomers without an understanding of their businessconditions, as well as their organizational structure andother traits. Conducting sales without this understanding

Financing Based on an Understanding of Business Prospects

Financing Basedon an Understandingof Business Prospects

01
St o ry

1

True resolution of issues thatbegins from understanding
the customers.

Customers

Bank personnel in charge of corporate
accounts = Account manager

Investment and funds(QR Investment)

Loans, deposits, andsettlement(Hokkoku Bank)

Consulting

Servicer（Hokkoku Servicer）

28

Leasing

System(CC Innovation)(Hokkoku Bank)(Hokkoku General Leasing)(Digital Value)

Investment advisory(FDAlco)Card(Hokkoku Bank)(Hokkoku Credit Service)

E-commerce site
(COREZO)

BPO(Hokkoku Management)29

｜(1) Financing Based on an Understanding of Business Prospects｜

Initiatives to improve productivity

̶Achieving speed and eﬃciency by going digital̶Capitalinvestment

Items of value
For long-term
use

Loans
(recurringmodel)

Leasing business(cyclical model)

Goods that
becomeobsoletequickly, etc.

E：Reuse (to pre-owned market)
E：Recycle (recycling)

Vehicles forbusiness use,
etc.

Leasing
E：Reduce

Items whose
lease period has
expired

Waste

G：Strict compliancewith the Waste
Disposal and Public
Cleansing Law( proper disposal ofindustrial waste basedon subject law)

We consider ﬁnancing as one means of resolving issues,and provide loans and leases to meet the funding needs ofthose customers experiencing capital-related problems.
We never engage in sales activities that are not alignedwith customersʼ needs, such as asking for business as afavor and conducting mere push style sales.

30❶
Ask customers tounderstand ourpolicies and measures

Evolution and growthof customers

Improverelationshiplevel⤴

Person in charge
at a company(3) Confirmationof fund usage

Regional revitalization

Communication
plan
Improve

Account
manager

The launch of this system eliminated the physicalpaperwork for both customers and the Bank andminimized the burden of clerical tasks.
In the spring of 2024, we will begin operation of our new
corporate internet banking system to which we plan to
introduce an overdraft function by around the summer.
Customers will be able to manage the process fromborrowing to repayment using our internet banking
service, and we hope that this will further improve
convenience and productivity.

Items of value(maintenance lease)

Propose the use ofvarious subsidy
programs for a
carbon-free society,and support theapplication process(2) Notification
using Teams

Deposits, loans,settlement, leasing,card, consulting,equity investment(funds), etc.

HOKKOKU DIGITAL BANKING

The understanding of businessprospect and communication
Communication between our team and our customers is
indispensable to the eﬀective sharing and resolution ofcustomer issues based on the understanding of businessprospect. We believe communication, or deepening our
dialogue with customers, fosters relationships and leads
to the true sharing and resolution of issues, which in turncontributes to the development and growth of ourcustomers. By building up such cases, we hope to support
the revitalization of our region as well.
How does Hokkoku Bankʼs “understanding of businessprospects” work speciﬁcally? As the ﬁrst step, the accountmanager, including branch managers at our sales branches,

takes the lead in gathering customer information. These, forinstance, include information on the business model, supply
chain, business plan, management team, products andservices, organization, and ESG and SDG initiatives.
Based on the gathered information, we conduct
thorough internal discussions, and sound the customer out
on any new perspectives and queries, deepening our
dialogue along the way. By repeating this cycle, we hope toaccelerate mutual understanding and sharing.
This leads us to the next step, which is to internallydiscuss our vision on how the customer ideally ought to be,
identify the gaps between the vision and the reality,
including hypotheses, and draft corresponding measures.
Then, through dialogue with the customer, we share ourinsights and build a framework to work together inresolving the issues. The process allows us to hone our“understanding of business prospects.”
In terms of communication, which is another importantfactor, we develop a communication plan depending on
the actual level of relationship with the customer, andrelationshiplevel⤴

❷
Understandcustomersʼ
way of thinking

Understandingof businessprospect❸
Discuss issues
based onhypothesis
Sharingof issues
Resolutionof issuesenhance the customerʼs corporate value and improve ourrelationship level at the same time. We introduced a new“core client” concept (see diagram below), redeﬁning
the traditional concept of “main bank,” to highlight ourintent to prioritize relationship levels with our customers,delving into the existing gap with reality throughhypothesis-based discussions, among other means. We
believe the amount and quality of communication, alongwith the counterparty (who communicates with whom)
will be key in increasing the “core clients” whom we value.

Conventional main bank

Hokkoku FHDʼs “core client” concept

Focus on loan balance and share

Relationship level (sharing a common vision on
where the customer aims to be [sharing of issues])

One-sided sentiment and thinking

Shared sentiment and thinking

Individual-based touchpoints

Organization-based touchpoints

Superﬁcial communication

Communication with substance basedon understanding of business prospect

Financial analysis frombankʼs perspective

Sharing ﬁnancial assessment (debtor classiﬁcation)and providing feedback

02（1）
Financing Based on an Understanding of Business Prospects

Schematic illustration of the 3Rs(reduce, reuse, recycle)
initiatives through the leasing business

Sharing of issues
Hokkoku FHD Group

Hokkoku Bank
(1) Application

Communication

01
S t ra tegyloans and a leasing company for leases. In our Group,
however, corporate account managers at Hokkoku Bank
serve as the central contact point through which bothloan and leasing proposals are made and all steps fromapplication to contract-related paperwork can be handled.
Recently, we have seen more cases of customers
taking up leases due to concerns for the environmentand risks associated with owning equipment. In thissense, leasing is gaining stronger presence as a viablemeans of ﬁnancing. To address the uptick in leasingneeds, we have stepped up internal collaborations bystationing employees of group company Hokkoku
General Leasing at our sales branches and having themvisit customers together with the account managers. In
these ways, we hope to respond to our customers withgreater speed and convenience.

Relationshipbuilding

St o ry

To enhance convenience for our customers, we decided
to incorporate Microsoft Teams into our overdraft
service for daily cash management, launching a systemthat enables paperless application online.
To date, customers seeking to use the overdraft service
had to ﬁll out an application form, aﬃx their seals, andhand-deliver the form to a bank counter or pass it on toa bank representative in charge.

Understanding ofbusiness prospects

work to improve the relationship.
As the ﬁrst step, we seek to improve the relationshiplevel by asking the customer to understand our policies
and measures, while also working to understand thecustomerʼs way of thinking. Then, based on therelationship developed, we deepen our understanding ofcustomerʼs business prospect, and engage in ahypothesis-based discussion with the customer, which
involves the discussion of customerʼs management issues
as perceived by us. We believe that this allows us to help31

｜(1) Financing Based on an Understanding of Business Prospects｜

Sharing of ﬁnancials

Discussions(on vision of ideals and goals, etc.)

New loans provided without
a guarantee (ratio)(https://www.hokkokubank.co.jp/company/fsm/).

Income plan (¥ bn)
Leasing

For customers requiring our early involvement due totheir weak business performance, we have establisheda structure that allows us to share their true issues
based on a deeper understanding of business prospect,
and to work side by side toward resolution of such
issues. Speciﬁcally, we increased the number of generalmanagers in corporate banking from three to ﬁve so thatboth branch managers and these general managers canvisit customers on a regular basis. The Corporate Banking
Department is working as one to build relationships, shareissues, and deepen dialogue with our customers.
Through these eﬀorts, we hope to reduce our credit
costs to about ￥3.0 billion.
Credit costs(￥ mn)

11,820

FY2022Credit costs : ￥6.2 billion
Impact of change in theallowance recording
method -￥2.4 billion

6,214

Actions toward appropriate
credit risks

32

5,823
(86.81%)●Status details on initiatives regarding
business ownersʼ personal guarantee
guidelines are available on our website(Japanese only)

Sharing issues
and developing solutions

We believe that devoting our eﬀorts to the understandingof business prospect, communication, and sharing ofﬁnancials can also substantially contribute to the
reduction of our credit risks.
To date, we have moved ahead of other banks inpromoting loans that do not rely heavily on collaterals
and guarantees, and our dependence on personal
guarantees by business owners has been among thelowest nationwide. In November 2022, we discontinued
business ownersʼ personal guarantee obligations for
direct loans newly extended to corporate customers.
We are working toward lending that is not reliant oncollaterals and guarantees.

6,708

FY2019FY2020

FY2021

FY2022

3,000

3,000

3,000

FY2023

FY2025

FY2027

Loans

16.0

16.2

16.7

1.5

1.7

2.2

13.4

14.5

14.5

14.5

FY2023

FY2025

FY2027

FY2032

14.8
1.4

14.8
1.4

13.4

FY20221.276

3/20191.237

3/20201.168

3/2021

（％）

1.139

1.152

3/2022

3/2023Moving forward
To address the increasingly complex issues andspecialized needs of our customers, in March 2023, we
introduced industry-based sales in select regions, on a
trial basis. We aim to provide added value collectively as
a Group and with a sense of speed, by generatingsynergies through collaboration with CC Innovation̶
our Groupʼs consulting arm.
Additional time generated from productivity
improvements should be devoted to dialogue with ourcustomers. This has been our belief, which has been put
to practice from before. Moving forward, we willcontinue to create time for dialogue by pursuing
productivity, and will work together with our customers
to resolve more issues. We hope to improve thecorporate value of our customers and ourselves morethan ever, and thereby contribute to the development oflocal community.

02（1）
Financing Based on an Understanding of Business Prospects

Sharing information on ﬁnancial conditions
and debtor classiﬁcation

New loan transactions

01

Yield on business loans

S t ra tegy

Debtor classiﬁcation : Customer classiﬁcation into the categories of“normal,” “requiring attention,” “at risk of bankruptcy,” etc. following
assessment of their repayment ability based on ﬁnancial conditions, cash
ﬂow, proﬁtability, and other factors

Number oftransactions

Item

We formulated an income plan for our loans and leasing
businesses at the time we updated the medium- tolong-term business strategy.
The business model of expanding loan market share,common in past eras when funding demand was robust,
will no longer be sustainable. Accordingly, we willcontinuously work toward improving customersʼ
convenience by, for instance, using the power of digitaltechnology, with the hope of becoming a company ofchoice for our customers. We also believe that steadily
expanding the number of “core clients” will lead toincome growth, and for this, we will step up activities
focused on dialogue, both in quality and quantity, morethan ever before.

St o ry

In addition to our initiatives to understand customersʼ
business prospect, we also began what we call the“sharing of ﬁnancials” from 2022. This involves thesharing of information on ﬁnancial conditions anddebtor classiﬁcation (see note below) with ourcustomers, based on which discussions on ideals andgoals are conducted.
We have been sharing information on ﬁnancial
conditions from before, but rarely did we consider
explaining to our customers their debtor classiﬁcation.
This caused a disconnect in perception between us andthe customers with regard to the situation at hand,hindering our discussions on the future in some cases.
This conversation could be at times uncomfortable forsome customers, but unless both parties share an
accurate understanding of the state at hand, any
in-depth analysis and implementation of measures aremeaningless. At Hokkoku FHD, we believe true
relationship-building is only attainable through an open
and honest dialogue between both parties.

Earnings plan

Status of initiatives on business ownersʼ
personal guarantee guideline(October 2022 to end-March 2023)

Eight years have passed since we did away with sales
quotas. Nonetheless, we have been able to securestable income because we devoted our eﬀorts to theresolution of issues based on a customer-centric
approach. We believe that continuing and deepening
these eﬀorts that start with the understanding ofbusiness prospect is the only way to our progress.
We switched our focus from volume to proﬁtability(volume to quality), and duly shifted to loans primarily
targeting small and medium-sized enterprises (SMEs)
in the three prefectures of the Hokuriku region.
Low-spread lending, mostly in urban areas, hasdecreased as did our loans outstanding as we became
more conscious of proﬁtability. However, the lending
ratio to SMEs has been on the rise every year, reaching
77.5% as of the end of March 2023. We have been able
to suﬃciently meet the funding needs of the region,even during the spread of COVID-19.
Also, the loan yield has bottomed out and turned
upward as a result of our cost-conscious eﬀorts.
Average interest rate of newly executed loans (by type)（％）

Businessloans

FY2019FY2020

FY2021

FY2022

1.127

0.899

0.894

1.174

33

Takayasu Tada

President and Representative Director（2）
Consulting and Advisory

The CC Innovation, Ltd.

｜

Consulting forcorporate customers

Introduction
Hokkoku Bank has historically supported customersʼ
business growth by meeting their funding needs throughloans, among other services.
However, amid low growth and unpredictability of theJapanese economy, companies are now ﬁnding itdiﬃcult to even maintain their existing business models,and dramatic changes are under way in the environment
surrounding companies and local economies. In linewith this trend, customer needs have transcended the
traditional demand for funding, becoming more diverse.
For instance, a company may need to enhance its operationaleﬃciency and use ICT to raise productivity, or pursue

overseas development and M&A to expand its business.
It may want to build a new personnel system and develop
human resources to bolster organizational strength. In
such ways, the types of support our customers seek
from ﬁnancial institutions have changed substantially.
Against this backdrop, in 2015, Hokkoku Bank
launched a consulting business to resolve customersʼ
issues, leveraging the expertise it gained through years
of internal reforms. In April 2017, the Bank established
the Consulting Department with a mission to develop
the local community through the resolution of customer
issues. It widened the scope of consulting work andincreased staﬃng of specialists. With the expansion of
the scope of operations, a system that made it possible
to address all manner of customer issues was put in place.
In 2020, Hokkoku Bank began oﬀering consulting
services at each of the sales branches. By increasing

Resolving issues throughtailor-made services leveraging
our knowledge
2015

Resolving issues throughcollaboration withexternal partners
2010

Began eﬀorts to resolve issues
by referring customers toexternal partners

2013

Launched a proprietary advisorybusiness in the M&A ﬁeld

34

02
S t ra tegy

Consulting
and Advisory01
St o ry2

We will contribute to theinnovation of our customers,
the local community, and society
by deepening collaborationand customer communication.

Began providing paid consulting services
in the areas of business succession,
ICT use, and human resources

2016

Expanded coverage to include consultation
on overseas business2017

Established a department dedicated to consulting,and
expanded operations. Expanded coverage to include
consultation for improving business management

2020

Staﬀ in charge at the sales bases beganproviding consulting services

Expanding our network acrossJapan and overseas using
our accumulated expertise2021

Established CC Innovation and began
approaching new customer base
Established local subsidiaries inThailand and Vietnam

2022

Established a local subsidiary in
Singapore,expanding our reach to theentire Southeast Asia region
Began consulting services forﬁnancial institutions

2023

Established a local subsidiaryin Shenzhen, China

35

｜(2) Consulting and Advisory｜Consulting for corporate customers

CC Innovationʼs consulting work is still based on theexpertise Hokkoku Bank has gained through its long
history of internal reforms and the trial and error
experienced in the process. In addition, we consistently
incorporate the latest knowledge by actively training ourconsultants, and seek to provide hands-on support thatprioritizes dialogue with our customers.

Vision1.We consistently incorporate the latest
knowledge to help our customers
resolve all manner of issues.
2.We support the growth of all types ofcustomers, from small businesses tomajor corporations.
3.We support the accomplishment ofcustomer vision by working side byside.

Traits◉Supporting all types of customers

To support customers of all business sizes, from startups
to large corporations, we provide consulting services
with a team of about 100 people. In the future, we look
to increase this number to 200.
We believe that individual customerʼs growth drives
the development of local communities and the society atlarge, so we do not limit the scope of our customers bybusiness size or their locations. We have also extended
our reach abroad where we have multiple bases, andcan provide seamless support in Japan and overseas.
We are able to approach all types of customers becausesome 300 corporate account managers at the Hokkoku

36

Scope of support

Businessstrategy

Business succession planning,
restructuring

ＩＣＴ

BPR, introduction of groupware,system renewal

Human
resources

Development of personnel
system, training

Management
strategy

Formulation of business plan,
plan execution

Overseasbusiness

Establishment of local subsidiary,cultivation of overseas sales channels

Other

Support on subsidy application,
etc.

M&A
advisory

Intermediation, sell-side andbuy-side ﬁnancial advisory◉Providing paid services to clarify where
the responsibility lies
◉ Helping resolve all manner of issues

Customers face a wide range of issues and they often
carry multiple issues simultaneously. For this reason,
CC Innovation oﬀers an extensive consulting service
menu and is ready to provide comprehensive support tohelp its customers resolve their issues.
Relying on standardized consulting alone does notalways lead to eﬀective resolution of issues even with
the introduction of systems and tools. This is becausesome customers are reluctant to change theirlong-standing workﬂows and work methods. For thisreason, we do not oﬀer a standardized and packaged
menu. Instead, we provide fully tailor-made orsemi-custom consulting services catering to customersʼinternal policies, organizational culture, and employee
skill levels, which vary from company to company.
We provide support underpinned by thoroughdialogue and communication so that our consulting
services can be of value to our customers.

◉ Working alongside our customers toprovide long-term support

Rather than merely oﬀering our knowledge, we provide
thorough and long-term support until our customers
experience the beneﬁts of our consulting work throughthe changes and growth seen at their companies. Just
making proposals in response to inquiries is not enough.
For us, it is most important to assist our customers
responsibly through the execution phase.
We discuss and share with our customers their vision(goals for their companies) for the short term as well as

We have consistently charged fees to our customers
since the time we provided consulting services through
Hokkoku Bank. When we ﬁrst started the business, we
received comments such as “bank employees are not ﬁt
to provide consulting work” and “why is there a fee when
the service is being provided by a bank?” However, we
had a theory that as long as we engaged in eachconsultation with sincerity, maintained high quality,
and continued to provide value to our customers,
we would eventually gain peopleʼs understanding.
For fees, we combine various fee systems torecommend terms that best suit the customer. These
include, for instance, fee calculation based on theformula “hourly rate × number of hours,” a successfee-based arrangement, a subscription fee-based
arrangement, and a value-based system.
We believe our customers came to accept using paid
consulting services because we oﬀered ﬂexible andmultiple fee options.
In fact, from our signed customers, we have received
comments like “paid services are better since theyclarify where the responsibility lies and create a healthy
sense of focus.” We overcame various hurdles in providing
paid consulting services as a bank. CC Innovation
inherited this foundation and is now working closelywith its customers as a specialist consulting company.

◉Realizing vision based on
the understanding of business prospect

In working alongside our customers, we place theutmost importance on dialogue. The relationship of trust
built between Hokkoku Bank and its customers is basedon many years of communication. We engage inhigh-quality dialogue and deepen our understanding ofcustomers to tackle their essential issues and provide
appropriate proposals. Repeated discussions enable us
to make proposals on the true issues that customers are
not even aware of, and we can be highly eﬀective.
Because the eﬀects can be quite visible, customersʼsatisfaction levels also rise, making us better positioned
to provide consulting work on multiple issues on an
ongoing basis.
In working alongside our customers on a long-termbasis, we witness changes in customersʼ social
environment and management challenges on a daily
basis. Therefore, the services we provide must also
continue to evolve. We aim for our employees in chargeof customers to be always attuned to the latest
knowledge, so that they can make optimal proposals. As
a company, we consistently provide in-house training
opportunities and hold study sessions inviting outside
lecturers to raise our employeesʼ skills as consultants.

KPIs◉Consulting income

01
02
（2）
Consulting and Advisory

Vision and traits of CC Innovation

ﬁve to 10 years into the future, as this process clariﬁes
what needs to be done and in what order. We believethat this is the ﬁrst step toward the realization ofcustomer vision.

S t ra tegyBankʼs sales bases communicate deeply with thecustomers based on the understanding of businessprospect.
Without ongoing discussions, we cannot share anunderstanding of customersʼ issues. This is true certainly
for issues already in customersʼ minds (obvious issues),
but more so for issues concerning future growth or for
essential issues the customers are not yet even awareof (latent issues).
By having the Bankʼs account managers and CC
Innovationʼs consultants jointly engage in dialogue withthe customers, we can provide consulting that focuseson the most eﬀective initiatives toward corporate
growth and improved management. We believe this will
ultimately enhance our eﬀectiveness, raise customer
satisfaction, and lead to repeat consulting assignments.

St o ry

touchpoints with more customers, it laid the groundwork
for a system enabling consultation with all types of customers.
While the scope of operations as the corporate
consulting arm of Hokkoku Bank expanded steadily,
there were also rising sentiments among the staﬀ. We
wanted to respond to rapidly changing customer needs
with promptness and accuracy. We also wanted to
expand our sales areas beyond the three Hokuriku
prefectures and be of service to more customers.
Accordingly, in pursuit of further growth, we established
The CC Innovation, Ltd. as a consulting company of
Hokkoku Financial Holdings in June 2021.
Currently, corporate account managers at Hokkoku
Bank serve as the contact point representing Hokkoku
FHD. These managers carefully identify the obvious andlatent needs of the customers, and gain a sharedunderstanding of their management issues. Since thesemanagers can oﬀer solutions on behalf of CC Innovationand other group companies, this framework allows us,
as Hokkoku FHD Group, to work alongside our customers
and support them from a medium- to long-term perspective.

We understand that our consulting income in partreﬂects the value we provide to our customers and the
local community. In other words, we think that providing
higher quality value to our customers and the local
community, and supporting companies will lead to abetter society as well as our income growth.
3.3

2.9

(¥ bn)

1.9
1.0

2023

2024

2026

2028

◉Customers with contracts (cumulative)

The rising number of corporate customers to which wehave provided consulting and support reﬂects ourcontribution to overall regional growth and the extent
of our penetration. We will continue to approach andsupport a wide range of companies and contribute tofurther development of the regional economy.
(Number of customers)

1,900

1,030

2023

2,200

1,300

2024

2026

2028

Note: Excludes M&A advisory and business matching37

｜(2) Consulting and Advisory｜Consulting for corporate customers

Provision of diverse service menu utilizing proprietary framework

Where
the customer
aspires to reachin ﬁve / 10 years

Organization

Modernization oforganization and system
STEP 1
Cost reduction
Raise funds forinvestments towardachieving goals

STEP 2
Management( governance)

Transform and adopt
an organizational culture
ﬁt to address changes
in the environment

MindsetMindset evolution
STEP 3Operational eﬃciency
improvement (BPR, ICT)

Reform operations through the use of digitaltechnology. Eliminate manpower and time
constraints and create an environment where
staﬀ can engage in highly value-added work

Recurrent

Recurrent education
STEP 4MarketingTransition to a sales
framework centered on acustomer-ﬁrst approachand a perspective valuing
the customer journey（2）

Thai CC Innovationʼs local staﬀ member providing consultation◉Overseas network of Hokkoku Financial Holdings

STEP 5
Human
resources

Build a systemand environmentthat encouragecontinued growth◉Main service oﬀerings
Management strategy
formulation
Track record:

735 cases (cumulative)
Formulate management philosophy,

Operational eﬃciency
improvement / ICT utilization
Track record:

381 cases (cumulative)
Optimize operational processes
Improve eﬃciency of various

Support plan execution

Introduce various systems,

Business succession / capital
strategy / M&A
Track record:

194 cases (cumulative)

operations

support utilization

Overseas business
Track record:

93 cases (cumulative)

Human resource
development / human capital
Track record:

432 cases (cumulative)
Design personnel evaluation system,
wage system

job level, foster candidates for
executive positions

Introduce diverse talent

Other

M&A intermediation, ﬁnancial

Resolve various issues faced by

Consulting services for ﬁnancial

local subsidiaries

Shanghai
ShenzhenThailand

VietnamUnitedStatesPhilippines

Singapore

CC Innovation Vietnam Co.,Ltd.
Ho Chi Minh Representative Oﬃce

Indonesia

CC Innovation Singapore Pte. Ltd.

Other alliance partners
Metropolitan Bank & Trust Company (Philippines)
PT Bank CIMB Niaga Tbk (Indonesia)
State Bank of India (India)
Industrial and Commercial Bank of China,
Bank of Dalian, Bank of Jiangsu (China)

Management advisory
institutions

The CC Innovation, Ltd.
Overseas Business Group,
Consulting Dept.

Shenzhen CC Innovation, Ltd.

India

76 cases (cumulative)
Support ESG and SDG initiatives

advisory

Thai CC Innovation Co.,Ltd.

Track record:

Cultivate overseas sales channels
Establish overseas bases

Shanghai Representative Oﬃce

Provide training sessions based on

Formulate business succession plan
Support organizational restructuring38

Dispatch to Silicon Valley(Stanford University)

business plan

Build cost management system

02
Consulting and Advisory

Goal

01
S t ra tegy

◉ Five-step framework

The Hokkoku FHD Group has built its own network in
Southeast Asia and China, and uses this networkeﬀectively to achieve its vision, which is to “meet every
need of every customer.” Through collaboration
between our domestic and overseas bases, we seek tofurther enhance our consulting functions andstrengthen our eﬀorts to resolve customersʼ issues.
Much like the setup at our domestic bases, theoverseas network enables us to address various
customer needs, including those to improve theorganizational capabilities of overseas subsidiaries,
cultivate sales channels and suppliers for overseas
expansion, and conduct M&A transactions overseas.
In 2021, we established bases in Thailand (Thai CC
Innovation Co., Ltd.) and Vietnam (CC Innovation
Vietnam Co., Ltd.). In 2022, the Singapore Branch of
Hokkoku Bank was converted into a local subsidiary. In
June 2023, we further expanded our consulting

functions by opening a new base in Shenzhen, China(Shenzhen CC Innovation, Ltd.). Additionally, Hokkoku
Bankʼs representative oﬃces in Shanghai and Ho Chi
Minh City and the Overseas Business Group in Japan
work closely together to step up services and support
customersʼ business expansion abroad, especially inSoutheast Asia and China.

St o ry

The consulting services we oﬀer are tailor-made for each customer. Therefore, before providing the services, weestablish with our customers a common notion on their current state and the state they aspire to reach (goals) in ﬁve
and 10 yearsʼ time.
At times, it takes more than just partial measures for a company to achieve its goals. When company-wide reforms
are called for, we support the process based on our ﬁve-step framework.
These ﬁve steps are the very steps Hokkoku FHD Group followed when implementing company-wide reforms.
We will continue to utilize our own unique mechanisms and oﬀer a diverse consulting menu tailored to eachcustomerʼs individual situation.

Establishment of robust overseas
network enabling seamless supportin Japan and overseas

Overseas bases of Hokkoku FHD Group

Overseas partner locations / secondment and dispatch destinations39

｜(2) Consulting and Advisory｜Consulting for corporate customers

High customer ratings
We have received various positive feedback from our customers. In a survey conducted from May 2020 to March 2023
with 689 customers, 84% responded that they were “satisﬁed” with our consulting services.

Other
1％

Customersʼ
perspective

Neutral15％

Satisﬁed
49%

Verysatisﬁed
35%

Survey by Hokkoku FHD: May 2020‒March 2023
Total responses: 689“Never expected your service to be
this accommodating. I wish we had
consulted you earlier.” (Construction
business / management strategy)

Careful follow-up“We have received
easy-to-understand explanation andfollow-up each time we encountereduncertainties or concerns. As aresult, we were able to move forwardwith assurance and peace of mind.”(Manufacturer / M&A)

Customer review

Strengthened organizational capabilities through detailed
personnel development initiatives based on job levels
Mr. Manabu Ueda President and Representative Director

Yonezawa Electrical Engineering Co., Ltd.
The background leading up to consultation

We had worked on personnel development in the past, but could not
see any results since there was a disconnect between the training
content and our daily operations. In my opinion, the reason for this wasthat we had not set any training objectives and goals. Participation intraining became the objective in and of itself and the training did notcontribute to participantsʼ growth.
Hokkoku Bankʼs sales representative, with whom we do business ona regular basis, introduced us to the consulting services of CC
Innovation. We felt that since CC Innovation understood our businesswell, it may be able to propose a resource development plan thatwould suit our needs. So, we decided to seek their input.

We plan to expand our collaboration with ﬁnancial
institutions, consulting ﬁrms, licensed professionals,
and other external partners across Japan, particularly inurban areas, with whom we share common values.
To create opportunities to approach customers outside
the three Hokuriku prefectures and capture a newcustomer base, we will collaborate with our partners
and make full use of each otherʼs strengths to provide
high value to customers on both sides.

Moving forward, we ﬁnd it important to support growthof the entire region, rather than limiting ourselves tothe resolution of issues faced by individual companies.
As a speciﬁc initiative, we are thinking of oﬀering
consulting services to municipalities. There are also
issues that cannot be solved by a single company, suchas bottlenecks in industry supply chains. We hope tostep up our eﬀorts in this area through wide-reachingconsulting work, leveraging our unique perspective
honed through relationships with many business
partners.
We will also provide tailor-made support addressing
individual needs, regardless of the customerʼsbusiness size or industry. This is so that companies
indispensable for regional development can improvetheir productivity and provide better services to the
local community.

Future image of CCIʼs
network expansion

Overseas

Cultivating urban customers throughcollaboration with ﬁnancial institutions,and consulting services for ﬁnancial
institutions
Shinkin banks and some other ﬁnancial institutions arelikely to face diﬃculty developing their own consulting
business as there are hurdles in securing staﬀ andacquiring expertise. We plan to collaborate with these
entities and thereby cultivate customers in urban areas
where we have limited access.
Through consulting, we hope to oﬀer our Groupʼ s
accumulated expertise to those ﬁnancial institutions
that share our goals and values. We think that, in thisway, we can support the revitalization of regions where
our Group does not have a presence, and contribute to
the betterment of local communities extensively.

02（2）
Consulting and Advisory“We didnʼt sense any
patronizing attitude
somewhat typical of
consulting ﬁrms. Meetings
were carried out from theperspective of our own
staﬀ and based on our own
business analyses.”(Manufacturer /management strategy)“Always very sincere in consultation
approach.” (Long-term care andwelfare service / ICT)

Consulting services for municipalities andextended reach to entire industries

01
S t ra tegy

Easy to consult

Widening the customer base throughcollaboration with external partners
nationwide

St o ry“Never expected your service to be this accommodating.”

Future vision
̶Toward expansion of businessdomains ̶

Overseas

CCI
Osaka
CCI
NagoyaCCI Tokyo

External partners

We are committed to securing income through all oureﬀorts in achieving a better society and providing value
to other ﬁnancial institutions.

Impressions and changes after receiving consultation

We were not oﬀered a cookie-cutter-style training menu. Although CC Innovation knew our business from before,
it took the time to interview us ﬁrst to understand our current issues, and then provided a training proposal basedon the ﬁndings. Thanks to this, we have been able to implement additional measures, such as setting pre- andpost-training objectives, that would help these sessions gain traction. The feedback from participants has been
positive, and we are seeing changes in our organization.
The issues we face vary depending on job levels, so we have also received a proposal for highly eﬀective options
other than training, such as workshops, to address job-level-speciﬁc issues. CC Innovation can also accommodate
matters in the peripherals of human resource development, including HR system modiﬁcation and response toharassment. In this respect, it is a very reliable advisor for us.
For our staﬀ in the Human Resource Development Division as well, conducting training alongside CC
Innovationʼ s consultants has allowed them to better convey our companyʼ s thoughts and ideas to the training
participants. I believe the eﬀects well exceed what we normally expect from simple participation in training.
Moving forward, we want to respond to labor shortage and reduce overtime by improving our ability to eﬀectively
manage frontline operations. We will continue to welcome proposals that are in line with our current situation.

40

41

｜(2) Consulting and Advisory

Yutaka Imai

Executive Oﬃcer, General Manager of Life Planning Department,

The Hokkoku Bank, Ltd.
The FDAlco, Ltd.

Established FD Advisory, further
deepening our customer-centric
approach｜

Consulting forindividual customers

Aiming for transformation to acustomer-centric asset managementbusiness
Since 1998, when banks were ﬁrst permitted to sell
investment trusts over the counter, Hokkoku Bank has
been selling these ﬁnancial instruments as part of its
asset management operations for customers. In theearly days, the interest rates on deposits were declining,so even customers without any experience ininvestment trusts did not hesitate to buy the products,
especially those that oﬀered monthly distribution.
Meanwhile, back then, the performances of the bankʼssales branches and salespeople were evaluated basedon the sales and income amounts they brought in. Whilewe were supposed to propose the right product for theright budget to help our customers reach their dreams
and goals, we had our doubts that in some cases,
investment trust sales were overly focused on sales
amounts and commissions. We had to question whether
Average contribution to investment trustsand Hokkoku Omakase Navi
Omakase Navi

Investment trusts

31,842

15,263

FY201816,88437,45022,91642,30827,159we were truly prioritizing our customersʼ interest overthe bankʼs interest.
As such, since 2013, we have been reassessing ourbusiness structure from various angles to transform ourasset management business into a customer-centric one.
For our product lineup, we have progressively switched
to products suitable for long-term asset building suchas those with a diversiﬁed portfolio and those that callfor regular contributions. In 2014, we also began
handling no-load investment trusts for which we do not
charge handling fees at the time of purchase. In 2015,
we changed the evaluation system of our branches andemployees considerably. The quota system was
discontinued, being replaced by a system in which
performance was evaluated based on criteria such aswhether or not a proposal was in line with the customerʼslife plan. In 2019, we started oﬀering Hokkoku Omakase
Navi, a fully automated asset management service
that allows even beginners in asset management to startinvestments easily. Although the makings of aprosperous life vary from customer to customer, we arecommitted to helping our customers build their assets
and achieve their dreams and goals. To this end, we
focus on asset management proposals centered onlong-term, regular, and diversiﬁed investments that are(￥)

44,084

Hokkoku Bank

7.60

28,5044.1

14,958

14,53515,15015,581FY2019FY2020

FY2021

FY2022

3.4

FY2018Major banks

8.30

KPI results (as of end-March 2023)
Asset building-related

Investment trusts, Omakase Navi
Number of accounts

3.8

2.8

2.7

FY2019FY20208.43

Inheritance-related

Testamentary trust 46 cases
Estate settlement 23 cases
Inheritance seminars,
individual consultation sessions 57 times

4.6
3.4

FY202143,435Investment trusts, Omakase Navi, 401k
Total contributions ¥583 million
Investment trusts, Omakase Navi, 401k
Balance ¥98.6 billion

6.59
4.1

（2）

Hosted the Second Life Plan Seminar inviting CEO Satoshi Nojiri of FinWell
Research LLC to lecture on life planning after retirement (May 2023)

Regional banks

8.10

02

Life plan analysis (brieﬁng material)

Average holding period of investment trusts＊ Based on an analysis of quantitative data on distributors of investment trusts, etc., prepared by the Financial Services Agency

42

Customersʼ values have diversiﬁed, and it is no
exaggeration to say there are as many life plans andsolutions toward dreams and goals, as there arecustomers. To meet the diverse needs of the customers,
we found it necessary to develop a business model,
which allowed us to provide comprehensive advice froma neutral standpoint, rather than just oﬀering the
products and services of Hokkoku Bank. Accordingly,
we established The FD Advisory, Ltd. in 2021. (In 2023,
FD Advisory changed its name to The FDAlco, Ltd.
following an absorption-type merger with ALCOLAB, Ltd.)The business model of FD Advisory is unique in that thiscompany itself does not sell ﬁnancial instruments.
Instead, it specializes in providing advice for which it
receives fees from the customers. Since there is noneed for FD Advisory to sell products, it can pick a

01

Consulting and Advisory

President and Representative Director,

ﬁnancial instrument most suitable for the customer outof all products available in the market and recommend it
as a means to resolve issues. There is no risk of aconﬂict of interest between FD Advisory and its
customers.
As another feature, FD Advisory focuses on holistic
and optimal advice on asset management, asset
succession, and business succession based on life
planning. Depending on customer needs, we can provide
advice on solutions for entire families, rather than forjust one person. We also follow up on our advice byoﬀering lifelong support services. In addition, we seek toprovide higher value-added advice, fully utilizing theexpertise of our staﬀ with previous work experience inthe securities investment department of Hokkoku Bank.
Paying fees for advice is unchartered waters forindividual customers, even more so than for corporate
customers. However, from a survey targeting those whohave received our services, we were pleased to see a
growing number of customers appreciating our approachof personalizing the advice based on individual life
plans, and not being overly eager to sell ﬁnancial
products. We also started receiving requests from company
owners to provide life planning consultation services
as part of their employee beneﬁt programs. Moving
forward, we will continue to step up our customer-driven
eﬀorts and contribute to the enrichment and bettermentof our customersʼ lifestyles.

S t ra tegy

not easily swayed by market trends. As a result of theseeﬀorts, the average contribution and holding period forinvestment trusts and Hokkoku Omakase Navi aretrending steadily. We will continue to support ourcustomers in their asset building by focusing on
long-term, regular, and diversiﬁed investments.
In 2018, we launched a trust business at Hokkoku
Bank to provide customer-oriented services for both
asset building and asset succession to the next
generation. We also provide consulting services where
we support our customers through their life stages.
Speciﬁcally, we seek to gain a ﬁrm grasp of ourcustomersʼ life plans and issues at hand, present thisinformation in a visual context for better understanding,and oﬀer support in preparing wills and developing
inheritance measures.

St o ry

Contributing to the enrichment
and betterment of lifestyles
through our customer- driven
initiatives.

Individual consultation-related (FDAlco)FY2022We use in-house developed tools to create a visual outline of eachcustomerʼs life plan and to propose solutions.

Consultation on life plannin 17 cases
FP course, WM course 20 cases

43

｜(2) Consulting and Advisory｜

End-March 2021

15％

For a long time, banks have been the front runners ofJapanʼs ﬁnancial industry. Structurally, funding
demand for forward-looking investments has notgrown in the industry, and surplus capital continues
to build up in companies, households, and ﬁnancial
institutions. Japan is now entering a stage where it
aims to prosper by utilizing the accumulated ﬁnancial
assets, and the ﬁnancial service driving this signiﬁcanttrend is investment advisory. The Japanese government
will expand the scope of preferential tax treatment
for investments, positioning its plan to double thecountryʼs asset-based income as a priority policy.
Financial authorities have also submitted to the
National Diet amendments to the Financial Instruments
and Exchange Act, calling for ﬁnancial business
operators to reshape their operations focusing on
their roles as ﬁduciaries. In such ways, eﬀorts areunder way to lay the groundwork for transforming
Japan into an “asset management-oriented nation.” I
believe this year will be the year for all ﬁnancial
business operators to fundamentally rethink their

44

business approach. Fiduciary duty is the core
principle in investment advisory, and the mission of
an investment advisor is to generate proﬁts inalignment with the customersʼ interests. Investment
advisory diﬀers from banks and brokerage houses inorigin, required skillsets, and culture, even though
they are all ﬁnancial businesses. The competitive
strength of an investment advisory business lies in its
high level of expertise, rather than the volume ofassets under its management or the number ofcustomers. The expertise allows investment advisory
companies to thoroughly understand customersʼ
issues, elevate the quality of their analyses andviews, and provide appropriate proposals andexplanations to customers. FDAlco is committed tofostering specialists who understand the unique
attributes of investment advisory, and to establishinga business model beﬁtting Japanʼs new standing as
an “asset management-oriented nation.” Throughthese eﬀorts, we will strive to be recognized andsupported by our customers and the society at large.

11％11％
9％
％
7％ 8
5％

（2）

16％
13％

9％
3％

・Target customers: Individual customers holding investment trusts
as of the record date・Target transactions: Transactions through investment trust accounts at
Hokkoku Bank and through financial intermediary accounts at other companies
・Investment gain / loss ratio = total return ÷ fair value｜Topics

ve
ab
o
or

w

+5
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+5
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0%

or

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or
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Akemi Tanaka Chairperson and Representative Director The FDAlco, Ltd.

26％

％ ％
1％1％2 2 1％

-5
0%

2％

37％

22％

18％

11％
9％ 9％

or

Japan will transform into an“asset management-oriented nation.”
FD aims to become an investment advisory
ﬁrm beﬁtting of this change.

24％23％

21％

02

44％

End-March 2023

End-March 2023

-50%Through our investment advisory to regional ﬁnancial institutions and our own investment operations at Hokkoku
FHD, we have accumulated knowledge and expertise, which we plan to apply to our customersʼ asset building.
We also intend to further polish our specialist skills to better meet the needs of our customers by developing a
program to foster advisors capable of leading our investment advisory business into the future.

End-March 2022

28％ 28％

End-March 2022

Consulting and Advisory

Development of advisors

Ratio of customers by investment gains/losses
in foreign currency-denominated insurance
51％

Ratio of customers by investment gains/losses in investment trusts
33％

S t ra tegy

On June 1, 2023, The FDAlco, Ltd. began business operations following the merger
between Hokkoku Bankʼ s investment advisory company FD Advisory and ALCOLAB,
Ltd., which had been providing investment advisory to regional ﬁnancial institutions.
FDAlco will be providing investment advisory to individuals, general corporations, andregional ﬁnancial institutions across Japan that share our values.
For many regional ﬁnancial institutions, market operations have become an
important component of their business. Many of these institutions are now bolstering
their market division and fostering specialist talent as part of their priority measures.
Strengthening the market division is not a task that can be completed in the market
division alone. Decisions on expected returns, risk tolerance, and asset allocation are
management issues for regional ﬁnancial institutions. Furthermore, structural improvements such as increasing thestaﬀ count and boosting administrative eﬃciency must be implemented at the same time.
The operations of FDAlco will not be limited to investment advisory. It will provide solutions centered on
management issues, working closely with CC Innovation and other group companies of Hokkoku FHD.

01
St o ry

Investment advisory to regional ﬁnancial institutions

｜Data

Be
lo

｜Our strategy for regional ﬁnancial institutions

・Target customers: Individual customers holding foreign currency-denominatedsingle premium insurance policies as of the record date・Target transactions: Policies for which Hokkoku Bank conducted insurance sales.
Policies cancelled as of the record date and annuity contracts
for which annuity payments have already started (including
contracts with a deferment period) are excluded.
・Investment gain/loss ratio =(surrender value as of the record date + paid-in amount as of the record date)- lump-sum premium as of the policy date (all amounts are in yen)
Lump-sum premium as of the policy date (in yen)

Lately, we often see news on complaints and problems associated with structured bond andforeign currency-denominated insurance sales to investment beginners. Hokkoku Bank does
not propose nor sell these products to its customers based on the following philosophy.

Our stance on sales of structured bonds
For the following reasons, Hokkoku Bank considers structured bonds to be products unsuitable for individual
customersʼ asset building and investments, and has not sold any since 2018.
(1) Structured bonds have a complex structure that uses ﬁnancial derivatives, and were originally developed as products for
institutional and other professional investors.
(2) As such, it is diﬃcult for individual customers to understand, for instance, under what conditions a loss of principal could
occur, and we believe this presents a signiﬁcant risk.
(3) We also believe product descriptions regarding costs are in part unclear, making it diﬃcult for customers to understand.

Our stance on sales of foreign currency-denominated insurance policies
Hokkoku Bank believes that insurance products should be used for the purposes of protection and inheritanceplanning, rather than as investment tools. We do not position insurance products as instruments for investment
because they are not an eﬃcient means of investment when considering the cost burden of handling fees.
For the aforementioned purposes, there is little rationale to choose foreign currency-denominated insurance withforeign exchange risk, for the following two reasons. Accordingly, we have not sold any since 2020.
(1) For protection, should the amount to be received ﬂuctuate due to exchange rate movements, there is a risk of a customer
not receiving suﬃcient payment relative to the economic loss meant to be protected by the policy.
(2) If the purpose is inheritance planning, should the amount to be received ﬂuctuate due to exchange rate movements, there
is a risk of a customer not being able to develop a reliable plan for annual gifting.
●Status details on initiatives regarding our customer-oriented business operations are available
on our website (QR code to the right). (Japanese only)
https://www.hokkokubank.co.jp/company/about/ﬁduciary̲duty.html

45

Naotaka Terai

02

Managing Executive Oﬃcer

General Manager of Digital Department

S t ra tegy

The Hokkoku Bank, Ltd.

（3）Introduction
We aim to innovatively improve the productivity of our entire region, including local residents, businesses, andmunicipalities, by promoting cashless payment and digital transformation. For businesses and municipal bodies, we will
help simplify their business operations, reduce cash circulation costs, and enable data utilization, thereby creating anenvironment where they can concentrate on providing high-value-added services. Going cashless and digital enables
businesses to explore new opportunities, enabling municipalities to implement policies and provide public services more
eﬀectively. Local residents can enjoy a wide variety of convenient services oﬀered by such businesses andmunicipalities.
We believe that fostering such an environment improves the productivity of local communities and ultimately
revitalizes the overall region. We also plan to bolster the security and network infrastructure and strengthen our
economic infrastructure to ensure a stable environment for business transactions. In this way, we will build a highly
reliable business environment and win the trust of companies and investors in Japan and abroad.

Progress in Cashless Payment and Digitalization

Progress in
Cashless Payment
and Digitalization

01
St o ry

3

Toward creation of a seamlesscashless and digital society.

Providing a variety of better services tothe community through the use of cashlessfunctionality and digital data

All money-related
tasks can bedone from home●▲■銀行■■■ ■■■ 様¥0,000,000

■■■■

■■■■

■■■■

■■■■

■■■■

■■■■

Cashlesspayment

DigitalBaaS

Provides banking
functions toservices of various
companies

Eliminates costsof handling cash

BANK

Companies cancomplete bank-related
procedures in theirown oﬃces

46

Can use cashless payment
whenever and wherever

Enables the useof digital regional
currency for various
payments

Raises eﬃciency of
beneﬁt payments
and othergovernment services

47

｜(3) Progress in Cashless Payment and Digitalization｜

Various initiatives toward a “Super
Cashless Region”
To create a “Super Cashless Region,” we have promoted
various initiatives, such as supporting the uptake ofcashless-compatible devices in the Hokuriku region andimplementing projects together with the local
transportation company Hokuriku Railroad Co., Ltd. In
October 2020, we established a \1.0 billion Hokuriku
DX Cashless Fund. We continue working to promote
cashless payments by encouraging the use of Visa
debit cards and distributing card payment devices freeof charge.

◉ Promoting issuance of Hokkoku Visa
debit cards

To boost the number of cashless payment users, we
explain the convenience of cashless payments to local
residents and encourage their use of various services. For
instance, we promote the issuance of Hokkoku Visa debit
cards̶one of our core services. These debit cards, which
can be used like cash and grant reward points based on thepayment amount, are accepted around the clock, 365 daysa year, at any Visa-aﬃliated store globally. Currently, one
out of every 10 residents in the three Hokuriku prefecturesand one out of every ﬁve residents in Ishikawa Prefectureowns a Hokkoku Visa debit card, and transaction amounts
are also growing steadily.
Total transactions per year (¥ bn)
42.6

65.0
52.3

3/201817.9

3/20193/20203/2021

3/2022

3/2023◉ Convenient use of earned points

The points earned based on the amount paid with a
Hokkoku Visa debit card can be used at the stores of
Hokkoku Bank card-aﬃliated merchants and on the
COREZO e-commerce website (recommending thingsand experiences unique to Hokuriku), at a conversion
rate of one yen per point. We believe that creating avirtuous cycle of using the points earned throughcashless payment generates new consumption
opportunities in the region, helps cashless payment takeroot as an ordinary option thanks to its convenience, andleads to the spread of a cashless society.

For businesses◉ Promoting uptake of card payment devices

To increase the number of businesses accepting
cashless payment, we have oﬀered card settlement
services to aﬃliated merchants and supported theintroduction of various cashless-compatible devices.
Much like in our eﬀorts to promote the use of Hokkoku
Visa debit cards, we hope to encourage as manybusinesses to take up such devices, and thereby help
create a society in which people can make cashless
payments anytime and anywhere.
Since 2016, we have been oﬀering card payment
devices free of charge. The uptake of our devices andthe number of aﬃliated merchants have grown steadily,with the counts of installed devices and aﬃliatedmerchants reaching 7,286 and 6,628, respectively, as ofMarch 2023.

48

Contactless payment ratio (debit cards, overall)

74.8%

Contactless payment ratio (on-us transactions)

57.4%

46.7%

7.0%

3.6%
3/20183/2019

54.5%

16.3%

11.1%
3/2020

61.4%

59.0%

3/202127.7%

3/202236.3%

3/2023

In addition to card payment devices, we support the
introduction of other tools such as POS registers, ticket
machines, and automatic payment machines as part ofan all-round eﬀort to promote cashless and enhance
convenience for customers and productivity for businesses.

30.3
9.0

Contactless payment ratio

Cashless-compatible devices installed (cumulative)
POS
registers
Ticketmachines
Automatic
payment
machines

313 terminals

In October 2020, we established a ¥1.0 billion Hokkoku
DX Cashless Fund to support the digital transformation(DX) of local companies and municipalities andencourage the spread of cashless payment in theregion. In addition to supporting the introduction of card
payment devices, the fundʼs capital has been used to
install automatic payment machines in hospitals,
semi-self-checkout registers in supermarkets, andticket machines with cashless payment functions inpools and hot spring facilities, enhancing convenience
for their users.

Model case: Introduction of card payment devices

Kurikara Fudoji Temple

In February 2023, we helped introduce card payment
devices to the Kurikara Fudoji Temple (in the main hallon the mountaintop and Ho-o Hall) located in
Tsubatamachi, Kahokugun, Ishikawa, using the
Hokkoku DX Cashless Fund. This was our ﬁrst case of
supporting device installation at a shrine or a temple.
With the payment devices in place, the temple can now
accept various means of cashless payment, including
Visa and other debit cards, credit cards, e-money, and
QR codes, for contributions in exchange for a talisman,seal stamp, amulet, and other items. The temple has
also installed semi-self-checkout registers, which
improve theeﬃciency ofaccounting
and tabulation
tasks.

01
02（3）
Progress in Cashless Payment and Digitalization

Our Company aims for a safe and secure cashless anddigital society in which all activities in our day-to-day
lives fall in place smoothly and without delay throughcashless payments. Based on our various initiatives, wewill lead the way in making the Hokuriku region one of
the most advanced cashless and digital regions inJapan, and thereby revitalize the local community
through improved productivity and eﬃcient circulationof funds.

For local residents

Our payment devices are compatible with Visaʼs
tap-to-pay function, which allows quick and smoothpayment. Contactless payment reduces waiting timeat the cash register and improves store eﬃciency.
Businesses can also expect higher customer satisfaction
thanks to the smooth payment experience. In Ishikawa
Prefecture, the contactless payment ratio of the city ofSuzu is particularly high. Moving forward, we hope tofurther expand the use of contactless payment that is
beneﬁcial for both businesses and local residents.

◉Hokkoku DX Cashless Fund

S t ra tegy

Hokkoku Bank has been taking part in a joint projectwith Visa Worldwide Japan to revitalize the region basedon cashless payments using Visa cards. The project
touts “Super Cashless Region” as a slogan to build asociety across the entire Hokuriku region in whichanyone can make cashless payments anytime andanywhere with peace of mind.

Contactless payment ratio

St o ry｜

Toward a society in which anyone can make cashless
payments anytime and anywhere with peace of mind

19 terminals
27 terminals

Customer review

Card payment devices have boosted convenience for our customers.
Mr. Motoki Utsunomiya

President and Representative Director

Utsunomiya Co., Ltd.

At our bookstore, we feel that the momentum forgoing cashless has accelerated in recent years,
driven mainly by the Japanese governmentʼs point
reward program for cashless payments implemented
in 2019 and the spread of COVID-19 thereafter.
Contactless payment, which allows hygienic
and speedy payment via tap-and-go, also
provides peace of mind because money isdeducted from the bank account on the spot. For
this reason, it is also used by elderly customers.
In some of our branches, the staﬀ actively
encourages customers to use the tap-and-gofunction, and in fact, over 90% of Hokkoku Visa
debit card users choose contactless payment.
Many of our customers also use reward points forpayment with their Hokkoku Visa debit cards.

Points earned from shopping and dining at otheraﬃliated merchant stores can be used to buy books.
We believe the customers ﬁnd much joy in this.
The introduction of card payment devices gave
our customers more payment options, and theability to use reward points for purchases further
enhanced convenience. In the future, we hope to
see the arrival of a device that is compatible witha wide array of payment methods.

49

｜(3) Progress in Cashless Payment and Digitalization｜｜Launch of a digital regional currency service

A user directly loads theapp with Suzu Tochika

What we plan to achievewith digital currency

User identity
veriﬁed via a My
Number card at
the time of app
registration

Payment at
hospitals

Settlement of accounts
between companies
Improved operationaleﬃciency

Receipt ofsalaries

Cityʼs reward points

Digital regional
currency= Suzu TochikaCityʼs reward
points= Suzu Tochipo

Used in storeswithin the city
Issued by regional
ﬁnancial institutions
Can be converted
to cashChild-rearing allowance /regional economic measures（3）

Used in stores, etc.
within the city
Granted by the cityof Suzu

Point consolidation and use

Paid in Suzu Tochipo
Wellness points(existing)

Payment oflocal taxes

50

Payment of public
transportation fares

Digital regional
currency app
Both Suzu Tochipo andSuzu Tochika can beused for payment

Digital regional currency

02
Progress in Cashless Payment and Digitalization

At the press conference01
S t ra tegy

In the summer of 2023, Hokkoku Bank will begin oﬀering a digital regional currency service named Suzu Tochituka,
together with the city of Suzu, Kono Shinkin Bank, and Digital Platformer Corp.
Following the service introduction in Suzu, we plan to collaborate with other local government bodies in Ishikawa anduse blockchain interoperability to issue Ishikawa Tochika, a digital regional currency to be circulated across the entire
prefecture.
This summer, Suzu Tochipo points issued by the city of Suzu will also become usable in stores and other locations
within Suzu. Additionally, we are working to build a ﬁnancial system based on blockchain technology, with an aim tocirculate Suzu Tochika̶stablecoins issued by Hokkoku Bank̶within Ishikawa Prefecture.
While there have been cases of digitizing points and gift certiﬁcate beneﬁts issued by local governments, weunderstand this is the ﬁrst time in Japan that a project to circulate stablecoins has been implemented in collaboration
with a local ﬁnancial institution.

To promote the uptake of this service, we plan to create
an open digital regional currency that can be also loaded
from accounts of ﬁnancial institutions other than Hokkoku
Bank. In this way, we hope to raise the cashless payment
ratio of the overall region.
The service in Suzu is a joint project with Kono
Shinkin Bank. In April 2023, we held a press conference
together with the city of Suzu, Ishikawa Prefecture, andKono Shinkin Bank, messaging our hope that the service
will be used as a tool to facilitate mutual support among
local residents and enhance convenience in Suzu, whichfaces declining childbirth and aging population.

As the ﬁrst step in promoting the circulation of funds
within Suzu, we will work on the issuance of Suzu
Tochipo points from the summer of 2023 and expand thenumber of stores (hereinafter “participating stores”)
accepting the points. We will also work to improve theconvenience of these points by integrating Suzuʼsexisting point programs into Suzu Tochipo and making
the points usable as a digital regional currency. We plan
to support participating stores by enabling the use of
payment data to help revitalize the local economy andimprove services for local residents.
For areas other than Suzu, we plan to build a structurein which Hokkoku Bank (the issuer of stablecoins) can
join hands with regional ﬁnancial institutions that
support this project to collectively drive the endeavor.
By collaborating with regional ﬁnancial institutions, we
aim to achieve a seamless payment system usable bylocal residents and participating stores, regardless ofwhich ﬁnancial institutions they do business with.
Our digital regional currency service can also authenticate
user identity by linking the digital currency app withdecentralized IDs that are veriﬁed by My Number digital
certiﬁcates. Recording and managing transactions using
blockchains make the service tamper-proof, safe andsecure, and highly transparent. SHIKI, a blockchain
technology platform developed by Digital Platformer
Corp. to issue digital currencies and decentralized IDs,
is used to record and manage the payment data in thisproject. Blockchain encryption technology ensures asecure and highly traceable payment system.

St o ryEﬀorts to achieve a 100% cashless payment ratio in Ishikawa Prefecture

Working together with regional
ﬁnancial institutions to spread
usage

Money transfer
between individuals

Payment ofschool-related fees

E.g., 2‒30 points basedon participation in an
exercise class or step
count per day

The city of Suzu grants“wellness points,”“harmony-with-nature points,”
etc. as Suzu Tochipo points

Harmony-with-naturepoints (existing)E.g., 100 points for forest
conservation activities(tree planting/thinning),
beach cleanups, etc.

Integrated into Suzu Tochipo

Toward a simple and easy-to-understandpoint system through point consolidation51

｜(3) Progress in Cashless Payment and Digitalization｜Oﬀering a Digital Regional Currency Service

Purpose of oﬀering a digitalregional currency service

Data for reference

Domestic cashless
payment ratio: 36.0%
Domestic cashless
payments: ¥ 111 trillion
Ishikawa Prefectureʼs consumption
expenditure: Approx.¥ 3 trillion
Cashless payment ratio:
About 30%
Cashless payments:
Approx. ¥ 1 trillion

Other payments:¥111

trillion¥197trillion
Finalconsumption
expenditure ofhouseholds in Japan:¥308trillion

Source: Hokkoku FHD based on data from FY2019 Summary of Ishikawa
Prefectural Accounts, METI website, and Bank of Japan website

52

Phase

1.0

Summer FY2023

Lower the payment processing fee

Final consumption expenditureof households: ¥ 308 trillion

Domestic
cashlesspayments:

To achieve a 100% cashless payment ratio in Ishikawa
Prefecture, we have laid out the details of each phase of oureﬀorts toward oﬀering convenience to service users,
businesses, and the region at large.
In three years, we plan to enable payment of local taxes,
utility bills, and hospital and school expenses with digitalregional currency.
We also intend to enhance security and improve the user
experience by adding biometric authentication for user identity
veriﬁcation. Additionally, we plan to add other functionalities instages, including the ability to use digital regional currency forsalary payments at local companies, and the ability to
exchange it with other regional digital currencies.
Furthermore, we hope to support the uptake of cashless
payment and digitalization in regions other than Hokuriku byhaving other prefectures utilize the schemes we developed.
Through this business that aims for the circulation andfurther progress of digital regional currency, we will improve
local productivity and convenience via cashless payments anddigitalization, and work to make Hokuriku a quality region.

3.0 % ➡

0.5%

Phase

2.0

By end of FY2023

Processing fees borne bybusinesses in the prefecture

Phase

Approx. ¥ 30.0 billion

In one to three years

Approx.

¥5.0 billion

Reduction by ￥25.0 billion
This fee rate is substantially lower than the typical card
payment processing fee, which is 3.0%. By allowing all
businesses that handle cash, including hospitals andother entities, to use this service, we hope to reduce
their processing payment costs, improve their operationaleﬃciency, and ultimately free up the funds and time forthem to create new services of value.

3.0

Phase

4.0

Three years fromnow and beyond

Anticipatedeﬀects fromthe use of digitalregional currency

Authentication via the introduction of decentralized IDs veriﬁed by My
Number digital certiﬁcates
Launch of Suzu Tochituka, a digital regional currency service enabling
inexpensive QR-code payments at stores
Issuance of digital gift certiﬁcates and various points in Suzu Tochipo
issued by the city of Suzu

01
02
（3）
Progress in Cashless Payment and Digitalization＊1 Based on “Cashless Roadmap 2022” (2022) by Payments Japan Association

We look to provide new value to local residents,
leveraging the originality of this service, which isunderpinned by multiple elements.
First of all, in this service, reward points, digitalcurrency (stablecoins), and other applications can be
integrated into one application.
Users gain access to a highly convenient tool sincemultiple services are available within the same
application.
We also believe that a new economic ecosystem canbe created moving forward, once the digital local
currency used in the prefecture and the existing point
programs of cities and towns of the prefecture areplaced in circulation together within the same region.
Users will also be able to convert the Tochika digitalcurrency (stablecoins issued by Hokkoku Bank) back to
cash even after topping up their apps. Generally
speaking, for most electronic payment services,
topped-up funds cannot be converted back to cash.
However, with Tochika, users can convert it back to
cash as necessary, making it a safe tool even for those
hesitant to top up payment apps and go cashless.
For participating stores, the most attractive feature ofthis service is the low payment processing fee. We
believe that the heavy burden of processing fees is afactor hindering the uptake of cashless payments.
Therefore, in this service, we plan to reduce thepayment processing fee for participating stores to 0.5%,
the lowest level even based on international standards.

S t ra tegy

We are working on various initiatives to develop a “Super
Cashless Region” with the goal of creating a seamlesscashless society. Through the combination of this project
to circulate digital regional currency and our eﬀorts to
spread card payments centered on Visa debit cards, we
aim for a 100% cashless payment ratio in Ishikawa
Prefecture. We hope to promote new innovations by
having the entire prefecture go cashless and digital andalso improve overall productivity.
Currently, the annual cost of handling cash in Japan isestimated at about ￥3 trillion. The cashless payment ratioin Ishikawa Prefecture is over 30%, but considering thatover 90% of payments in South Korea are alreadycashless, the cashless payment ratio in Japan is still
relatively low＊1.
We believe raising the domestic cashless payment ratio
to nearly 100% can enhance the productivity of oursociety at large and encourage companies to invest in
human capital and business growth. We also hope tohelp improve public services by supporting thedigitalization of local government operations.

Future outlook

St o ry

Toward achieving a 100% cashless
payment ratio in Ishikawa Prefecture

Creating a service with value

Begin handling Suzu Tochika stablecoins
Loading of Suzu Tochika from bank accounts (issuance of Suzu Tochika)
Conversion to cash (remitted to a savings account) for an inexpensive fee
Payment of beneﬁts using Suzu Tochipo

Enable payment of local taxes, utility bills, and hospital and school expenses
with digital regional currency
Spread the use of digital regional currency to other cities and towns in
the prefecture
Link functions and services to apps of municipalities

Make Hokuriku known as a trailblazer in cashless payments and digitalization
Use digital regional currency for settlement of accounts between companies
Use in digital salary payments at local companies
Enable exchange with other regional digital currencies
Roll out the scheme to other prefectures“Making Ishikawa prefecture Japanʼs No. 1 quality region”
Data utilization
Improved convenience for residents
Improved productivity and emergence of innovations in the entire region,
thanks to going cashless and digital

53

｜(3) Progress in Cashless Payment and Digitalization｜｜Toward becoming a leading-edge digital bank
Internet banking

Digital banking oﬀered by a typical ﬁnancial institution

Internettransactions

Only somefunctions are
digitalized

Digital banking
Internettransactions

Over-the-countertransactions

Over-the-countertransactions

Legacy systems

Legacy systems

Digital banking envisioned by Hokkoku FHD

Internettransactions
Over-the-countertransactions
Legacy systems

Alltransactions
are digitalized

Digital banking

In February 2021, we began oﬀering HOKKOKU LIFE+
as a service ensuring a richer and more convenient
lifestyle for individual customers through cashless
payment and digitalized bank accounts. HOKKOKU
LIFE+ packages a Visa debit card with the Hokkoku
Cloud Banking service, and does not require a passbook
nor a personal seal to conduct transactions.

There are many beneﬁts for service users, including theelimination of fees for the use of ATMs at partner banks
and aﬃliated convenience stores across Japan andfor remittances to other ﬁnancial institutions via
Hokkoku Cloud Banking.

HOKKOKU LIFE+ membership:54

We are also working to develop a banking-as-a-service(BaaS) platform to oﬀer banking functionalities toﬁnancial services operated by ﬁntech companies. BaaSdevelopment signiﬁes the creation of a next-generation
ﬁnancial platform for companies and individuals
nationwide. We believe we can help improve regional
productivity by oﬀering a low-cost and easy-to-use
BaaS platform to providers of services that enhancecustomer productivity and convenience. By laying the
groundwork for an environment where local companies
can rapidly develop digital services, we will seek totransform the region and contribute to its sustainablegrowth.

BaaS business objectives:
Reach out to new customers
and contribute to the region◉Promotion of HOKKOKU LIFE+

As of end-March 2023

Business expansion acrossJapan using a BaaS platform

87,884peopleWe believe that by providing a BaaS platform to ﬁntech
companies, we can expand our customer base andcontribute to the region. Fintech companies oﬀer new
and innovative banking services not bound by theexisting framework of the banking industry. Having
ﬁntech companies use our BaaS platform allows us togain access to the customer base we cannot reach out
to directly.
Furthermore, ﬁntech companies focus on oﬀering
innovative ﬁnancial services to communities and people
lacking suﬃcient access to traditional banking services.
We hope to contribute to economic growth andﬁnancial inclusion of the local communities by utilizing
our BaaS platform to provide ﬁnancial solutions thatmeet local needs.

Beneﬁts of the BaaS businessIn the BaaS business, we manage the information on
deposits, loans, and proﬁles of the customers acquiredby the ﬁntech companies. This allows us to obtaincustomer data on startups and other businesses,
especially those based in Greater Tokyo. Currently, we
expect roughly 200 account openings per month. The
expansion of the customer base will lead to more
opportunities for Hokkoku FHD Group to propose
various solutions, including consulting by CC Innovation,

02（3）
Progress in Cashless Payment and Digitalization

In October 2021, we eliminated the base handling fee
and also lowered the remittance fee in our corporate
internet banking service. We are working to reduce theburden on customers and support the further progressof their digitalization eﬀorts.
In the spring of 2024, we plan to release a newcorporate internet banking service with upgradeddesign, operability, and security. Once the service is inoperation, we intend to expand functionalities in stages,
including the addition of an overdraft function, so that
customers will be able to conduct online the full rangeof transactions oﬀered at bank branches.

01
S t ra tegy

At a typical ﬁnancial institution, digital banking involves thedigitalization of only some of the functions within banking
transactions. However, Hokkoku Bank seeks to modernize
all of its banking functionalities through the in-housedevelopment of internet banking services, including
Hokkoku Digital Banking for corporate use and Hokkoku
Cloud Banking for individual use. We oﬀer these digitalplatforms to our corporate and individual customers withoutcharging any base handling fees.

◉ Reducing the burden on customers
through corporate internet banking

investment advisory by FDAlco, and potential
investment and support from QR Investment.
Furthermore, through other initiatives, such as matching
the end-user startups with companies in the Hokuriku
region, we hope to encourage the mutual growth ofthese companies and create new business opportunities.
We also believe that the accumulation of knowledge
on advanced technologies for BaaS platform development
and the continuous horizontal rollout of our expertisein this area will bring about various beneﬁts. This
strategy is important in that it also focuses on thepenetration and improvement of technology on top of
pursuing simple income growth.
Accumulation of knowledge means gathering
information on the latest technological trends and bestpractices on BaaS platform development from internaland external sources, and accumulating such informationas our own knowledge. We will pursue the best means
to meet market and customer needs by cooperatingwith specialist teams and partners. Horizontal rollout
means making full use of our existing technologies
and services, and oﬀering such technologies to othercompanies. We hope to elevate the technological levelof the industry as a whole by collaborating with othercompanies through the sharing of technology.
Along with sustainable growth, we will seek to resolve
social issues through collaboration with othercompanies to promote mutual progress. One of ourmajor goals in building a BaaS platform is to provide
ﬁnancial capabilities to the local community. Improving
convenience for the end-users by looking beyond thebusinesses receiving our services will lead to therevitalization of the region as a whole. Based on thisthinking, we will strive to achieve innovations for theentire region, based on the success of local businesses.

St o ry

We are working to create a digital bank in which allbanking transactions are digitalized.

service and those already oﬀered by other companies.
The front end refers to the service screen used by theend user. With our service, ﬁntech companies can freely
design their own service screens to showcase theirunique identity and brand value, customizing the user
experience and providing attractive services that diﬀer
from their competition. They can also implement
original marketing strategies and win new customers by
optimizing the service screens based on their strategies
and business targets. Additionally, since the service
screens can be easily modiﬁed, ﬁntech companies areable to ﬂexibly respond to market trends and user
feedback. The ability to promptly add functions andmake improvements, providing a more user-friendly
interface and value-added functions based on user
feedback, allows these companies to maintaincompetitiveness and raise customer satisfaction levels
as well.
In these ways, we will continue to innovate using ourbanking capabilities, collaborate with ﬁntech companies
to transcend standardized services, and work to build
more optimal customer services.

Image of BaaS platform utilization
Provide functions and services ofgroup companies

Bankingfunctions＋services

Serviceusage fee

BankingfunctionsFintechcompany

Maintenancefee, etc.

Diﬀerence from existing services
Our service gives ﬁntech operators free rein to modify
the front end of the ﬁnancial services they provide to
end users. This is the greatest diﬀerence between our

Utilization of customer data55

a Hokuriku information platform

Satoshi Sono

Showcasing the charms of
the Hokuriku region
to the world

President and Representative Director

Information portal specializingin the Hokuriku region（3）

COREZO HOKURIKU＊under development

COREZOFAMILYFUNDING

COREZO
MALL

COREZOTRAVEL

Crowd funding

E-commerce mall

Lodging reservation
websiteProvides travel
opportunities

Provides opportunities
to support businesses

Provides opportunities
to purchase/experience

02
Progress in Cashless Payment and Digitalization

In May 2019, we launched COREZO as an e-commercemall that showcases the outstanding goods andexperiences Hokuriku has to oﬀer. Thereafter, westarted a crowd funding site COREZO FAMILY
FUNDING in January 2022 and opened a lodging
reservation site COREZO TRAVEL in July of the same
year. In autumn 2023, we plan to launch COREZOHOKURIKU, a portal site for various information on the
Hokuriku region.
The company COREZO was created to have
Hokkoku FHD staﬀ discover and nurture the best of
Hokuriku together with local residents and introduce
their ﬁndings widely throughout Japan. To revitalize
the Hokuriku region in a sustainable manner, we will
engage in lasting activities, mobilizing the strengths of
Hokkoku FHD group companies.

The company COREZO seeks to create new value by integrating various digital content, including the
e-commerce mall, with community events. One such eﬀort is the launch of COREZO HOKURIKU, an
information portal dedicated to the Hokuriku region, slated for autumn 2023. COREZO HOKURIKU will feature
in-depth information on Hokuriku gathered by Hokkoku FHD staﬀ, and introduce the outstanding things andexperiences oﬀered by the region widely to the world. The information gathered by the staﬀ will also be used
to plan cross-content projects within the COREZO franchise, and develop collaborations among the various
digital content and between digital content and regional events.

01
S t ra tegy

We want to introduce the best of Hokuriku to Japan andthe world to revitalize the region in a sustainable manner.

Our vision of COREZOSt o ry

Operation of COREZO,EVENTS

Local events

Provides participation
opportunities

Since the opening of the Hokuriku Shinkansen high-speed railway between Tokyo and Kanazawa in 2015, theHokuriku region has become increasingly popular throughout Japan. We hope to work together with the local
residents and develop the COREZO HOKURIKU portal site into an “information platform of Hokuriku,” thereby
sustainably revitalizing the region. We will also work to enhance COREZOʼs various content and achieve overall
growth as a company.

The COREZO, Ltd.
Website sales and traﬃc (actual / plan)

2023
Start “COREZO HOKURIKU” (plan)(Sales: ￥'000)(Visits)

Sales

3,000,000

Number of visits to the COREZO website

2021
J ul. Goods sold through COREZO MALL
exceeded 3,000 items
Sep. Membership surpassed the 10,000 mark2019
May Launched e-commerce mall COREZO MALL

56

FY2031 (plan)

Sales: ¥2,712 million
Visits: 89.48 million

2,500,000

2022
Jan. Launched COREZO FAMILY
FUNDING
Jun. Introduced corporate coupons
Jul. Launched COREZO TRAVEL

100,000,000

80,000,000

2,000,000
60,000,000
1,500,000

1,000,000

FY2022 (actual)

40,000,000

Sales: ¥79 million

Visits: 2.76 million
20,000,000

500,000

0

3/2022

3/20233/20243/2025

3/20263/20273/20283/20293/20303/20313/2032

0

57

The concept of COREZO MALL is“creating things and experiences in
Hokuriku together.”

COREZO FAMILY FUNDING is a place to match business
operators in Hokuriku with supporters across Japan. It
diﬀers signiﬁcantly from other crowdfunding sites in that
employees of Hokkoku FHD who have regular contact withthe businesses are able to provide face-to-face support.
Hokkoku FHD employees work with business operators to
structure projects based on their individual needs, such as
marketing, promotion, and ﬁnancing needs associatedwith new product development.
COREZO FAMILY FUNDING is a crowdfunding platform
where business operators, local communities, and theemployees of Hokkoku FHD work as one team in supportof the endeavors of the business operators.

2,796(Items)3,384

Progress in Cashless Payment and Digitalization

Snapshot of an internal meeting

3,291

（3）

COREZO TRAVEL is a lodging reservation site
specializing in tourism and travel in the three
Hokuriku prefectures of Ishikawa, Toyama, andFukui. In addition to introducing lodging
facilities, the website oﬀers information on
nearby shops as well as stay plans incorporating
various activities. A lodging reservation site thatwelcomes visitors from all around Japan,
together with the local lodging facilities andbusinesses.

Sale of ownership right to a
shiitake mushroom log

Items of merchandise handled

02

COREZO TRAVEL provides a chance to visit Hokuriku

Example of an experience-oriented merchandise01
S t ra tegy

COREZO MALL is not an online shopping site that
simply sells physical goods. It is unique in that it
also sells intangible items like special programsand experiences, attaching additional value tomerchandise. Furthermore, in addition to promoting
sales, the shopping site encourages participationand collaboration, oﬀering new business opportunities
in product and business development. We believe
this format can only be accomplished by a regionalbanking group.

The Hokuriku region still oﬀers many wonderfulthings and experiences that are just waiting to bediscovered. To ﬁnd them, we visit vendors directly,
engage in dialogue, and try out the items ﬁrst-hand.
This process allows us to properly introduce themerchandise to consumers, along with theirindividual stories.
On some occasions, Hokkoku FHD matches up
business operators so that they can jointly create
new products.
We want to discover, nurture, and introduce thewonderful things, charming people, and uniqueexperiences found only in Hokuriku, together withthe local community. We want to make people
across Japan fall in love with the Hokuriku region.
COREZO MALL is a website created jointly by theparticipating vendors and Hokkoku FHD to
showcase the rich oﬀerings of Hokuriku.

COREZO FAMILY FUNDING supports the endeavors ofbusiness operators in Hokuriku

St o ry

COREZO MALL̶an e-commerce mall where the best of
Hokuriku can be purchased

Number of registered lodging facilities:

3/2021

3/2022(￥ '000)

Sales

33,8383/2021

78,96738,7003/2022

3/202158

3/2023(People)Purchasers
8,608

3/2023

12,4619,682

3/2022This program, available since the launch of
COREZO, involves the sale of ownershiprights to log-grown shiitake mushrooms
called Noto 115.
Noto 115 is the common name for a
shiitake mushroom variety called Kinko No.
115. Within this variety, the highest
quality mushrooms that meet the criteria of
8cm or more in cap diameter, 3cm or more incap thickness, and 1cm or more in edge
curl are shipped to the market as Nototemaripremium-brand shiitake mushrooms.
The vendor decided to oﬀer the programon COREZO MALL to highlight the rarityand value of Nototemari, rather than justselling the product.

36 (as of June 2023)

COREZO will growtogether withthe local community
Hokuriku has wonderful people, nature, andculture. COREZO is a website that features
the good things and experiences that emerge
from such an environment, presenting them tothe world in a proper manner without any
embellishments. A place for expression where
consumers living in Hokuriku, the businesses,
and the employees of Hokkoku FHD can joinhands to revitalize the region. To become sucha platform, COREZO is committed to growing
together with the local community.

3/202359

02

Fumio Hamano

S t ra tegy

President & Chief Executive Oﬃcer
Representative Director

The QR Investment, Ltd.

（4）

Introduction

between deposits and loans, and redirect the ﬂow ofcapital from loans to investments. In the lending
business, it is important to recover the principal safely
while securing margins, but in the investment business,
we believe it is most important to enhance the value ofthe investee companies.
The business model of QR Investment is such that it
makes gains when the corporate value of the companies
it invests in rises. Through our investment business, wehope to contribute to the region in a way thatcomplements Hokkoku Bankʼs loan operations.
By providing capital support through equity
investment, we will supply funding to our customers
and also raise corporate value. By doing so, we intend
to drive growth of the entire region. Through each of
our projects, we will become a bridge that connects
the regionʼs ecosystems, and make Hokuriku aquality region underpinned by the qualitative growth ofeach local community and the revitalization of theoverall region.

QR Investment was established in June 2021 to support
the diversifying ﬁnancing needs of corporate customers
in all life stages of a company.
The economic environment in Japan and overseas haschanged dramatically in recent years, and thechallenges companies face have also diversiﬁed. For
sustainable growth, it is now indispensable forcompanies to take measures for the medium to longterm, modifying the business model, implementing
company-wide organizational reforms, restructuringbusinesses, and strengthening the ﬁnancial base,among other means.
Meanwhile, regardless of the changes surrounding
companies, individual depositors are being encouragedby the slogan “from savings to investments” to channel
their surplus funds directly to corporate stock andother investments, without making bank deposits.
Banks may also need to rethink their business model ofgenerating income from the interest rate spread

Expansion of Investment Business

Expansion of
Investment Business01
St o ry

4

Investing toward a better futureand leading the way to aquality region

KPIs
FY2023

FY2027Size (total of all funds)￥50.0 billion￥120.0 billion

Total investments￥35.0 billion￥90.0 billion

1.0×

1.6×

65 deals

170 deals

Multiple of cost (MoC)
Number of investees (cumulative)

60

61

｜(4) Expansion of Investment Business｜

Vision and purpose of QR Investment
̶toward corporate value enhancement, together with the customers̶

2. We uphold a balanced investment policy that seeks to support investees growth andcontribution to local communities, rather than just focusing on returns.

Without the growth of the Hokuriku region, there is no growth for the Hokkoku FHD Group. QR Investment invests toenhance the regional quality of the three Hokuriku prefectures centered around Ishikawa. Our mission is to make
Hokuriku a quality region recognized around the world.
Known as “Kaga Hyakumangoku,” which meant it had an exceptionally high rice production on its land, Ishikawa
Prefecture was once a quality region that enjoyed great economic prosperity. Even today, traditional industries existingsince the Edo period, as well as textile, construction machinery, and electronics industries that developed after WorldWar II, continue to deliver quality from Ishikawa to the world.

Business succession
support

Revitalization support

LP investment in domestic
and overseas funds

Engagement-focusedinvestment in listed stock（4）

List of funds
Start-up phase
Seed

Early

Funds under management̶responding to all life stages of a company
The needs of our customers vary according to their corporate life stages, from start-up to growth, maturity, andregeneration or decline. Their needs are also diverse. QR Investment oﬀers a full range of funds to address the varying
life stages of individual companies and responds to those needs that a bank cannot meet.

Life stages of a company

1. Start-up phase

Incorporation
Business plan formulation
Hiring and development of personnel
Capital investment
Project development

3. Mature phase

New businessBusiness succession to a family member/employee
Sale to a third party through M&A
Cessation

MiddleLater

Hokuriku Region Venture Fund

Sales channel expansion
New business
Capital investment
Hiring and development of personnel

62

QRI Growth Support Fund

Improvement plan formulation
Business succession to a family member/employee
Sale to a third party through M&A
Cessation

Regeneration/decline phase

Ishikawa SME
Revitalization Fund

◉QR Fund◉QRI Growth Support FundTo meet diverse customer needs, the fund invests in awide array of ﬁelds not covered by existing funds. It
contributes to the sustainable growth of companies andlocal communities by providing management support
that ﬂexibly utilizes the Groupʼs functions.

The fund seeks to support the sustainable growthof local companies pursuing further growth byproviding risk money and a variety of solutions totheir management issues.

◉Hokuriku Region Venture Fund

◉Ishikawa SME Revitalization FundThe fund invests in startups that operate in the Hokuriku
region or are expected to contribute to the regionʼsrevitalization. It aims to bring new vitality to the Hokuriku
region and invigorate the economy.

As a public‒private fund whose largest investor
is SME Support Japan, the fund̶while ensuring
neutrality and fairness̶supports traditional
local industries having diﬃculty recovering due
to debt overhang but are reasonably proﬁtable intheir core businesses, as well as SMEs withtechnological strengths. By providing support,
the fund seeks to invigorate the local economy.

Target phases: Start-up, growth, mature, regeneration
Fund size: ￥50.0 billion

Joint GP: Carbon Ventures Co., Ltd.
Target phase: Start-up
Fund size: undisclosed◉Noto SDGs Fund

4. Regeneration/decline phase

Mature phase

Noto SDGs Fund

Joint GP: BP CAPITAL, Inc.
Target phase: Start-up, growth, mature
Fund size: ￥700 million

2. Growth phase

Growth phase

QR Fund◉Making Hokuriku a quality region and deliveringa message across Japan

What initiatives are necessary for Hokuriku to be a quality region
in a sustainable manner? We think attracting tourists from within
Japan and overseas through active investment in food culture andthe tourism industry could be one approach.
We pursue quality as a region where new value is created aheadof the rest of Japan and innovation occurs. Take, for instance, aninnovative project that is nearly impossible to accomplish on anationwide scale. We envision such a project starting oﬀ small in
the Hokuriku region, and then spreading throughout Japan.

02
Expansion of Investment Business3. We will help develop management-level talent and work toward sending out resources
to companies within the region.

Growth support

S t ra tegy

1. We will provide our business partners with a package of thorough funding and hands-on
support as a shareholder, incorporating our equity investment and the collective
capabilities of the Hokkoku FHD Group, including lending and consulting functions.

Start-up support

01
St o ry

VisionOur support service lineup

Joint GP: DBJ Regional Investment Inc.
Target phase: Growth, mature
Fund size: ￥1.0 billion

Target phase: Regeneration
Fund size: ¥2.0 billion (No. 2),¥2.0 billion (No. 3)

The fund seeks to support companies that use theassets and resources of Ishikawaʼs Noto region tocreate sustainable businesses, and those companies
that engage in businesses contributing to the SDGs. By
creating this model, it aims to take the ﬁrst step inachieving social change and SDGs from Noto.

63

｜(4) Expansion of Investment Business｜

Flow and overview of the fund business

Loans and investments diﬀer substantially in their mechanisms and the advantages and disadvantages they pose tocustomers. As a group, Hokkoku FHD has the capacity to assess customer needs and provide options to use either of theseﬁnancing methods as necessary. Loans are low-cost but require repayment. Investments are relatively high cost, but theinvestee company has no repayment obligation since the target business will take on a joint-management structure with QR
Investment. Through its various initiatives, QR Investment will provide customer solutions that cannot be achieved throughbank loans.

Our business model calls for medium- to long-term involvement from deal discovery (sourcing) to exit from the deal
(return on investment), which is when the fund generates gains.

Method of securing funds from ﬁnancial
institutions, etc., as debts.
Loans due within one year are recorded in theﬁnancial statements as current liabilities, andthose payable over a term exceeding one year
are recorded as non-current liabilities.
Collaterals and guarantees are required insome instances.

Method of raising funds through stock
issuance.
Investments are accepted as capital, andare therefore recorded in the ﬁnancial
statements as net assets.
Soliciting capital broadly from the public iscalled a public oﬀering, and accepting
additional capital from a speciﬁc investor
is called a capital increase through athird-party allotment.

Advantages

As long as the debtor continues to fulﬁll its
debt obligations (repayment/interest payment),
the creditor does not get involved in management
except when otherwise provided.
A relatively low-cost ﬁnancing is possible
under the current interest rate environment.

As there is no repayment involved, investments
have the eﬀect of stabilizing the investeeʼsﬁnancial base and improving its creditworthiness.
In many cases, the investee can receive
management and operational support fromthe shareholder.

Disadvantages

Repayment must be made according to therepayment terms, regardless of whether thebusiness is doing well.
Without creditworthiness, a company cannot
borrow.

When the new shareholder gains voting andother rights, its involvement in management,rights to preferred dividends, etc., could
minimize the investeeʼs business ﬂexibility,inﬂicting a heavy burden.

Main use offunds

Ordinary working capital, capital investment(additional investment for existing businesses)

Investment for new initiatives (newbusiness, business expansion, etc.) andbusiness transformation (revitalization, etc.)

SummaryDiﬀerence between consulting services and funds
There is an overlap between our business and the consulting services of Hokkoku FHD group company, CC Innovation,in that we both confront the issues our customers face and work together with them toward resolution. However, we
diﬀer substantially in our relationship with the customer (company) and the scope and duration of our involvement. After
conﬁrming the status and needs of the customer, we coordinate within the Hokkoku FHD Group and propose what we
ﬁnd to be the optimal way to provide support.

Consulting services
Relationship withtarget company

ClientShareholder

Scope ofinvolvement

Within the scope of assigned themes
E.g., business strategy formulation,
ICT, personnel system formulation

All aspects of management

Duration of
involvement

Short term

Medium to long term

Target company (shareholders)Target company + Fund(shareholders)

Decision maker

64

Funds

Approx.

Strive to ﬁnd investment opportunities using our diverse network, including
account managers at the Bank, M&A intermediaries, other funds, andinvestees.

Due diligence

Conduct corporate research, market research, competitive analysis, growthstrategy assessment, etc. to verify whether the target company can grow asa result of receiving investment from our fund.

Execution

After discussions with the target company, determine the terms andconditions of our investment, including the potential dispatch of executives,
dividend payment, and the price at which the fund will purchase shares.

Management
support

To make progress in line with the business plan, provide support using
Hokkoku FHDʼs resources, e.g., dispatching executives from QR Investment
and having CC Innovation provide consultation. External resources will also
be used as necessary.

Return on
investment

Determine an exit plan that meets the needs of the target company, such as
selling the shares to a successor within the company, or to a third party,
should there be no successor.

2‒ 6monthsApprox.

3‒10
years

02
（4）
Expansion of Investment Business

Investments

Sourcing

S t ra tegy

Loans

Activities

01
St o ry

From loans to investments̶the advantages of utilizing investments

Target areas̶expanding nationwide and globally without limiting
ourselves to the Hokuriku region
Since we base our business on our strength, which is the trust we have earned from the local community, most of ourinvestee companies are in the Hokuriku region. However, we are not keen on settling comfortably just in Hokuriku. The
economy has globalized and is now borderless, and we ﬁnd it necessary to take on challenges transcending regionalboundaries.
We also intend to invest abroad. In overseas investments, we can expect high growth rates that are diﬃcult to achieve
in Japan. Additionally, we can diversify our portfolio risks through the conversion of Japanese yen cash holdings to US
dollars and ownership of dollar-denominated assets.
We believe investments outside the Hokuriku region will bring to QR Investment economic gains, collaborative
opportunities with diverse talent, and innovations created through such interactions.

Customer review

QR Investment supports us as apartner inour companyʼs growth
Mr. Katsuhiko Tsujimoto

President and Representative Director Tedori Kanko K.K.

As the largest operator of an amusement park and comprehensive pet businessin the Hokuriku region, we have been operating since our founding in 1967,
aiming to become a theme park loved by customers in the region. Meanwhile, inrecent years, we have faced many challenges associated with aging facilities,
digitalization needs, staﬃng shortages, and business succession issues. To
formulate and implement a medium-term management plan, we decided toaccept investment from the QRI Growth Support Fund and receive support fromQR Investment internally from its position as a shareholder.
We also have an outside director from QR Investment who is giving us advice on overall business
management at various meetings and helping us update our personnel system and introduce systems to raise
operational eﬃciency. The outside director has been instrumental in the implementation of our business plan.
We hope to continue partnering with QR Investment, aiming together for further business growth.

65

02
S t ra tegy

Seiichi Sagiike
Managing Executive Oﬃcer,（5）General Manager of Capital Market Department

The Hokkoku Bank, Ltd.

Reorganization of the market
operations structure
Hokkoku FHD is working toward further sophistication ofits market operations. To this end, it added market operations
to its priority business areas in the 2023 medium- tolong-term business strategy unveiled in May 2023.
In March 2023, we transferred the core market
operation tasks and functions, including the formulationof investment strategies and plans, to The FD Advisory,
Ltd.̶the investment advisory arm of the Hokkoku FHDGroup. Personnel specializing in market operations
were also consolidated to FD Advisory.
In June 2023, FD Advisory merged with ALCOLAB,
Ltd., which provided investment advisory to regional
ﬁnancial institutions, changed the name to The FDAlco,Ltd., and kicked oﬀ a new business. ALCOLAB has longprovided investment advisory focusing on global asset
allocation＊1 and has helped regional ﬁnancial
institutions strengthen their operational structure to
pursue securities investment as a core business. It also
supported introducing and utilizing the risk appetite

framework＊2. In these ways, it helped regional ﬁnancial
institutions transform their business models.
Going forward, we will step up our eﬀorts to achieve
further sophistication in market operations and risk
management by combining ALCOLABʼs expertise with
Hokkoku FHDʼs business footing.
We also intend to transcend regional and existing
business boundaries and share the knowledge andexpertise gained through the securities investment
activities at Hokkoku FHD with individuals, general
corporations, and regional ﬁnancial institutions acrossJapan. By doing so, we hope to enrich the lifestyles ofindividual customers and contribute to the sustainablegrowth of corporate customers.

Further Sophistication of Market Operations

Further Sophisticationof Market Operations

01
St o ry

5

Toward portfolio optimization
through a diversiﬁed investment
strategy that positions
multi-asset funds ascore assets＊1 Global asset allocation: An asset allocation method in which assets areallocated in a diversiﬁed manner, avoiding concentration in a speciﬁc
investment product or country/region, to eﬃciently secure returns while
reducing/controlling risks. An asset management technique based on theconcept of diversiﬁed investment.
＊2 Risk appetite framework: A framework for managing business and risks
through clariﬁcation of the “risk appetite” vis-à-vis the accomplishment ofmanagement goals, business strategies, and ﬁnancial plans. Here, “riskappetite” refers to long-term guidelines on the type of work to be undertaken,
the type and level of risks to be taken, and the level of proﬁts to be generated.

◉Organizational structure of capital market departments
Previous
Hokkoku Bank,
Capital Market
Dept.

▼Main Functions
MarketOperations
Group
MarketPlanning
Group

FD Advisory

ALCOLABManagement strategy,
investment plan
ALM
Fundraising
Execution (trading/forward
exchange contracts)
Market planning
Risk management
Market systems

Investment
Dept.

Investment advisory
Fund management

RIA Dept.

RIA, sales planning
Financial institution sales
Fund management
Research

Current (as of July 2023)▼Main Functions

Hokkoku Bank,
Capital Market
Dept.

MarketOperations
Group

Fundraising
Execution (trading/forward
exchange contracts)

FDAlcoInvestment
Dept.

Management strategy,
investment plan
Investment advisory
Fund management
Research

RIA Dept.

RIA

Financial
Institutions Dept.

Financial institution sales

Management
Planning
Dept.

Company-wide strategy
ALM
Risk/complianceMarket systems

Consolidate Hokkoku FHD Groupʼs capital markets functions to FDAlco to further enhance expertise in market operations andbolster the risk management function
66

67

｜(5) Further Sophistication of Market Operations｜

Track records and traits of ourmarket operations

1,600

Yen bonds

Foreign bonds

Realized gains/losses by asset class

Equity(¥ bn)

Investment trusts (excl. multi-asset)
Multi-asset funds

30

1,449.1
1,400

1,300.9

1,200

1,107.5
1,007.6

1,000

81.9
92.7
800

184.8

955.0
78.5
91.8

74.7

77.5

69.3

83.7

188.0

Yen bonds

254.0

Multi-asset funds

85.3
68.6

10
5
0

213.8

18.7

20.2

7.8

11.5

7.2

4.5

6.0

4.2
0.1
2.7

3.2

◉Multi-asset funds̶asset allocation

2.8
2.5

2.3

15.0

0.8 1.6

16.4

0.9
2.3

3/20203/2021

3/2022Furthermore, we will engage in forward-looking
management of portfolios and risks, for instance, throughpreventive rebalancing of the portfolio based on a certain
scenario or changes in the market environment, without
necessarily adhering to our model portfolio. By doing so, wewill seek to raise the level of our portfolio management.

3/2023

Target mediumto long-term
portfolio

88.2
818.9
648.1

662.6

78.4

701.2

60

49.9

40

Current
portfolio

33.5

200
20

FY2018FY2019FY2020

FY2021

FY20220

13.6

3/20193/2020

Minimallevel gains

Return(investment
yield)

827.4

3/2021

3/2022

3/2023（5）

USTreasury
bonds
49.3%

Japanese equities
6.5%
Japanesegovernment
bonds
26.3%

Amount acceptable
for risk-taking(¥ bn)
100

400

02

US
equities
17.9%

21.3

1.9

01

FDA Global Balanced Fund

Gains/losses on valuation of securities

80

68

20.0

−8.7
3/2019600

0Equity

2.8

-5

225.1

122.1

28.1
0.8

25

15

Foreign bonds

Investment trusts (excl. multi-asset)

20

150.0

20.0

In the 2023 medium- to long-term business strategy
announced in May 2023, we have set a goal of building aportfolio with an expected return of around 2%.
Accordingly, we are stepping up our eﬀorts toward portfolio
optimization.
We intend to clarify our model portfolio, which presents
the best risk-return eﬃciency from a long-term
perspective, and formulate investment plans and strategies
focusing on the overall portfolioʼs performance, rather than
individual assets. We will visualize expected returns andthe portfolio formation process to improve our ability to
explain the portfolio and encourage active internal andexternal discussions.

To improve the yield on securities and the Sharpe ratio,
we have incorporated FDAlcoʼs multi-asset funds (thosefor which FDAlco provides investment advisory to thefundsʼ asset managers) into our overall portfolio as coreassets. Having FDAlco provide investment advisory isessentially the same as being able to internally develop
simple and low-cost multi-asset funds that are alignedwith Hokkoku FHDʼs investment strategies.
Even during challenging periods of tight overseas
funding conditions or signiﬁcant market ﬂuctuations,having multi-asset funds in our portfolio allows us to
expect stable returns and achieve long-term capitalgains while mitigating price volatility. Additionally, theability to generate stable returns enhances the ﬂexibilityof our investments, for instance, enabling portfolio
rebalancing to improve each assetʼs yield over theholding period.
Aside from Hokkoku FHD, other regional ﬁnancial
institutions and business companies also invest in these
multi-asset funds. We will continue to strengthen oureﬀorts in multi-asset funds that contribute to stable
income generation and long-term expansion ofvaluation gains.

Further Sophistication of Market Operations(¥ bn)

Multi-asset funds

S t ra tegy

Marketable securities outstanding (book value)

Initiatives for portfolio
optimization

St o ry

Our balance of marketable securities has reached￥1,449.1 billion and is maintaining an uptrend. In linewith the risk appetite framework, we have adopted adiversiﬁed investment strategy, moved away fromthe buy-and-hold approach, strengthened our risk
management structure, and worked to boost income
from market operations.
In terms of our investment characteristics, we placeemphasis on equity and multi-asset funds. From 2014,
we have increased our holdings in shares (Japaneseequities) for pure investment. Our move was driven by
the growing focus on corporate governance, andexpectations toward proactive shareholder return
policies and corporate value enhancement. While there
were challenges, such as the spread of COVID-19 andan uptick in overseas interest rates, most recently, wewere able to record valuation gains on our equity
holdings, which signiﬁcantly contributed to our income.

From 2021, we have bolstered investments in
multi-asset funds. These funds have become coreassets that can bring in stable income over the longterm, as they reinforce our diversiﬁed investment
strategy. Over the past two years, we have expanded ourholdings in multi-asset funds to ￥254.0 billion, and weplan to further build up our holdings going forward.
In FY2022, our foreign bond investments were
adversely impacted by the sudden increase in interest
rates, and we closed some of our losing positions andposted realized losses. The challenging environment forforeign bond investments is expected to linger for the
next year or so, and the global economy is becoming
increasingly uncertain.
Even in such an environment, we will assess interest
rate cycles and build a portfolio centered on global
asset allocation that captures stock market growth.
Our policy is to avoid short-sightedness and work
toward portfolio optimization with a long-term
perspective, while appropriately controlling risks.

Eﬃcient frontier

FDA Japan and US Diversiﬁed I
nvestment Strategy FundUS
Treasury
bonds
40.0%

US
equities
10.0% Japaneseequities
10.0%

Japanesegovernment bonds
40.0%

Risk (VaR/capital allocation amount)69

Managing Executive Oﬃcer,

The Hokkoku Bank, Ltd.

（6）

Takeshi Igawa

General Manager of Information Systems Department

Amid dramatic changes in our social environment due tothe spread of COVID-19 and the declining and aging
population, among other factors, digital transformation(DX) has become indispensable for addressing the rapid
evolution of digital technologies and the speed at which
the world moves and for continuously improving thevalue of our entire region.
To meet the diversifying needs of our customers andthe local community, we transformed from a conventional

Our vision of digitaltransformationbank to a “next-generation integrated regional company.”
We are working to fundamentally change ourcorporate culture and work styles while actively utilizing
cutting-edge digital technologies to reshape ourbusiness model and speedily deliver new high-value
services necessary for regional DX.
While helping to improve regional productivity using
the digital solutions developed through these eﬀorts, wehope to promote the DX of our entire region, making fulluse of our consulting and advisory services.

Use technology in strategy, transform people andorganizations, and continue to change the local
community for the better

Corporate
cultureCulture of
discussion

ValuesCustomerﬁrst
policyChangedrivers

Human
resources

DX and System Modernization

Vision and strategy

70

02
S t ra tegy

DX and System
Modernization

01
St o ry6

We will contribute to the digitaltransformation of our entire
region, making full use ofdigital technologies.

Fulﬁll corporate philosophy
and brand philosophy

Discussions based on dialogue; project-by-project decision-making➡ Premised on delegation of authority from leaders to members
nternal/external collaboration➡ Use collective knowledge to accelerate innovation and value creation Agile organization
Share values with customers
Achieve proﬁtability for bothcustomers and Hokkoku FHD
Act for customers
Work of oneʼs choice, inclusion and diversity,
professionalism, roles over hierarchy
Utilize ideas of others; contribute to thesuccess of others
Supportive leader➡ Meet the needs of members
and contribute to their successCustomerjourney

Customer-driven services; personalization
Simplify and speed up customer processes
Improve the value we provide;customer successCloud native/mobile ﬁrst, cost reduction,IT/security, data utilization, digital marketing,digitalization
next-generation sales model
Provide feedback in one-on-one meetings
Promote collaboration
Share best practices; an organization
keen to learn

Organization
Structure

Management

Work
environment

Psychological An atmosphere that allows people to freely voice their thoughts and feelings➡ Basic premise of collaboration
safetyCareerreview71

｜(6) DX and System Modernization｜

Why we insist on developing systems
in-house

Although I mentioned that in-house development did
not necessarily mean developing everything ourselves,
reducing system development costs is also an important
point. Even if our own employees lead the in-house
team, if the majority of the team members are deployedfrom our IT partners, costs will inevitably be high.

72

2009
2000 onward

Introduced an areaspeciﬁc sales system
Began branch
consolidation
Created a call center

2007

Simpliﬁed
administrative
tasks at branches,
centralizing workat the headquarters
Established theInformation Systems
Department(for strategic systems
investment)

Integrated General Aﬀairs
Department into the
Planning Department(to strategically reduce
non-personnel costs)

2015

Adopted open architecture
for the core banking system
Distributed Surface
laptops andsmartphones to all

Begin considering next-generation
regional digital platforms (next-generationcore banking system, API and BaaS platform, etc.)
Begin digital regional currency projectBegin operation of in-house-developed ATMs

2019

Introduced a credit line
system (as a strategic
credit initiative)

Established The Digital Value, Ltd.
Began operating cloud-based internet
banking service for individual customers

2012

2020

Began using tablets
to sell ﬁnancial
products
Business process
re-engineering (BPR)
and systematization in
the loan departments

2013

2023 onward

2016

2010

Completely overhauled
the IT infrastructure
Introduced Microsoft
Teams (shifted business
PCs to the FAT ﬁle system)

Moved to new headquarters

Consistently deliver messages from top management
and planning departments to all employees to change
mindsets and promote reskilling
Improve information transparency and achieve
nonhierarchical communication through theuse of groupware and communication tools
including Teams
Practice agile thinking and actions by having
employees from business departments
participate in development teams
Implement DevOps and agile training for all
employees and new hires
Increase diversity by actively promoting
mid-career hires and collaboration withoutside partners
Obtain latest knowledge on DX and innovation
by dispatching personnel to Silicon Valley

DX and modernization
Modernization“Modernization,” as we see it,refers to the fundamental revampof legacy systems, and even businesses and operations,done together with the dramatic improvement of systemdevelopment productivity through the adoption of modern

2022

2021

2014

Restructured the IT infrastructure;
introduced Surface (Microsoft)
Discontinued the Credit Dept.
Consolidated administrative tasks for loan
operations and sales to the General
Administration Dept.

DX initiatives to date
The history of our DX initiatives goes back more than 15
years.
After establishing the Information Systems Department
in 2007, we have moved away from outsourcing our corebanking system, shifting to full-ﬂedged in-house systemdevelopment, including the development of subsystems.
In 2013, we distributed tablet PCs to all employees sothat they can work freely without being restricted to alocation. We also increased information transparency
through the use of groupware, which helped us create a
ﬂat organization and improve productivity.
In 2019, following the release of a public cloud-based
internet banking service for individual customers, weestablished an IT company, Digital Value, to further
accelerate digital transformation (DX). Thereafter, wepressed on with in - house product development
based on the concept of “agile + cloud” and with theparticipation of IT engineers from across Japan. In 2021,
we reduced costs by migrating our full banking system
to a public cloud service, the ﬁrst endeavor of its kind inJapan. As the next step, we have begun developing abanking-as-a-service (BaaS) platform to provide banking
functionalities to other systems via API, centering on anext-generation core banking system that operates in amore cloud-native environment.
Over the years, our corporate culture and the mindsetof our employees have changed substantially. Some 15
years ago, the organization was highly vertical andhierarchical, but it is now ﬂat and agile thanks to theinitiatives outlined on the right.
These long-standing initiatives have nurtured ourability to build products using digital technology and anorganizational culture of DX that underpins such ability.

DX for customers (2015 onward)

Introduced “bring your own
device” (BYOD)
Accelerated in-housedevelopment of subsystems
Disclosed service levelobjectives (SLOs)

Launched HOKKOKU LIFE+
Migrated core banking system
to the cloudEstablished Hokkoku Financial
Holdings, Inc.
Obtained DX certiﬁcation
Made base handling fees forcorporate internet banking free

01
02
（6）
DX and System Modernization

Active hiring of digital talentInternal DX (through 2015)

S t ra tegy

However, in-house development does not necessarilymean developing everything ourselves. New products,
technologies, and concepts are constantly generated inthis world. Rather than developing everything ourselves,
we plan to actively utilize what is already available andvigorously collaborate with external IT partners in areas
where we lack the expertise. In this way, we hope torelease products promptly while also improving thecapability of our in-house development team.

DX initiatives to date

St o ryIn-house system development cannot be avoided if wewant to continue providing high-value digital solutions
in a speedy manner.
Conventional outsourced system development always
involved the processes of deﬁning requirements, getting
quotes, comparing and evaluating the IT partners,
negotiating, and signing the contract. The long lead time
up to actual development and the vulnerability to
speciﬁcation changes were disadvantages.
Outsourced development based on a waterfall model
would not have been an issue if the pace of change inthe world were moderate and if the “correct answer” tothe product being made were clear. However, in the eraof volatility, uncertainty, complexity, and ambiguity(VUCA), in-house development must remain ﬂexible tostart small and create a product that is close to the“correct answer,” and nurture growth from there. To
generate high-value products from a customer-oriented
perspective, we also need to collaborate with our
employees on the frontline and tackle development as
one team. It is important, even for engineers, tounderstand our corporate philosophy and the value that
our customers seek. We need engineers who havesuperior digital knowledge, understand our company,
and can engage in development as one team. As such,
we came to the conclusion that outsourcing was diﬃcultand that in-house development was our only option.

Contracted engineers also undergo rotation. This meansthat engineers who have taken the time to understandour environment and products could randomly leave theteam. Furthermore, since technology evolves quickly
these days, even those engineers sent from our IT
partners are often required to learn new skills fromscratch or go through reskilling.
Rather than training expensive external engineers
ourselves, we thought it would be more beneﬁcial tohire regular employees (engineers) who have ample
room for growth and can work for many years with asolid understanding of our companyʼs business direction.
Accordingly, in November 2019, we established Digital
Value as an IT company within the Group. Digital Value
practices team-based agile development, recruiting
engineers from across Japan and even overseas to work
remotely. It brings to the fore such work options as fully
remote development, a performance-based annual
salary scheme, and a discretionary work-hour system,
which have been diﬃcult to introduce at traditionalbanks. It is generally believed that the competition in
hiring digital talent is ﬁerce. However, as a result of
implementing these systems and work styles, we
successfully hired 57 employees over the three and ahalf years up to June 2023. We intend to continue
leading the DX of the entire Hokkoku FHD Group while
stepping up eﬀorts to increase homegrown engineers.

technology, architecture, and agile and other development
methods attuned to the rapidly changing VUCA era.

Cloud strategy envisioned by
Hokkoku FHD
Since 2017, we have actively utilized public cloudservices, embracing a cloud-ﬁrst approach. Among theparties concerned, there was much attention on whether
public cloud was suitable for ﬁnancial institutions.
Against this backdrop, in September 2019, we launched
our internet banking service for individual customers on
Microsoft Azure. In May 2021, we migrated our corebanking system to the same cloud platform. These moves
simpliﬁed infrastructure procurement and development
and helped us speed up the implementation of our IT
initiatives. Even in terms of quality aspects such as
security and availability, we were able to improve ouroperations compared to the past when we handled
matters with limited in-house resources. That said, we
have yet to fully harness all the potential of cloudtechnology and there is so much more to pursue. We plan
to step up our eﬀorts in cloud-native development
exempliﬁed by keywords like microservices, containers,
and CI/CD, and optimize our system infrastructure,
adopting both the multi-cloud strategy that takes
advantage of multiple public clouds, and the hybrid
cloud strategy that leverages on-premises. We will
simultaneously accelerate and enhance the quality of oursystem development by focusing on cloud-native,
multi-cloud, and hybrid cloud.

73

｜(6) DX and System Modernization｜

Hokkoku FHDʼs cloud strategies

MindsetCloud 3.0
(2020‒2022)

Try to migrate part ofthe subsystem

Exclude importantsystems from the scopeof migration
Migrate to cloud, startingwith subsystems

Cloud ﬁrst
Migrate all systems
to the cloud

Use the cloudappropriately

Perimeter network
using thin clients

Use of FAT/internet connection
Introduction of zerotrust architecture

Active internet use
Full-scale
introduction of zerotrust architecture

Active internet use
Full adoption of zerotrust architecture
Multi-cloud and hybrid
cloud
Evolve to BaaS;
two-way API connection
In-house developed andagile
Multi-cloud andhybrid cloud
In-house developed
and agile

Use of PC dedicatedto internet access
Perimeter network

Cloud 4.0(2023‒2025)

Cloud 5.0(2026 and beyond)Spread the use ofcloud in the regionCorebankingsystemAdoptedon-premises andopen architecture

Adopted virtualizationand open architecture

Operating on IaaS

Active utilization of
PaaS
Partially in-housedeveloped and agile

Subsy
stems

Testing cloud at theproof-of-conceptlevel

Migrated subsystems
to IaaS via lift andshift

Active utilization of
PaaS
Partially in-housedeveloped and agile

Cloud native
development
In-house developed
and agile◉Digital regional currency

Basic policy(Release planned in FY2023)

We have partnered with Digital Platformer Corp. tointroduce stablecoins that use blockchain technology.
Users can load stablecoins from their bank accounts,
use them for purchases at participating merchantsʼ
stores, and also convert the digital regional currency
back to cash deposits. Additionally, we are looking into
the possibility of enabling exchange with other digitalregional currencies in the future. By expanding theuptake of an inexpensive cashless payment method, we
will seek to raise the cashless payment ratio in theregion, digitalize point systems, and thereby achieveeﬃcient circulation of funds and improved productivity.

System risk management
To provide peace of mind to customers using theGroupʼs services, Hokkoku FHD Group positions risk
management of the systems supporting its services as a
top priority. Under the leadership of our management,
we have put in place a framework for managing systemrisks, and are working to elevate the level of our systemrisk management, including a focus on cyber security.

◉API and BaaS platform

Use of cutting-edge technology
Generative AI, as represented by ChatGPT, is poised tohave a profound impact on system development andbusiness eﬃciency optimization. To improve development
productivity and quality, we have also begun using AI toautomatically generate programming codes and ﬁx bugs
in our projects for a corporate internet banking service
and an internal web system. However, so far, we haveidentiﬁed beneﬁts only in a few standardized program
areas, so we are looking forward to further AI evolution.
We also think AI can be used to train our newengineers, by having it generate model program codes.
Additionally, the use of AI is likely to expand for Q&As
within the company and with customers. In the past,
employees had to manually draft anticipated questions
and corresponding answers, but from now on, responses
can be generated automatically using a generative AI
engine with internal data as input. This would allow theinquirer to obtain the required information more quickly
and with certainty. We have already started an initiative
to improve operational eﬃciency as well by loading an
AI engine to the chat tool we use internally.

Key strategic systems
We will enhance the value we provide to our customers andthe local community through our strategic systems deﬁned
by cloud utilization and agile in-house development.

◉Hokkoku Cloud Banking

Internet banking service for individual customers,
Hokkoku Cloud Banking, has been used primarily
through a smartphone app since 2019. We developed
this service in-house using cloud technology and agile
methodology. Since the previous internet banking service
was on-premises and we outsourced the development,
it was diﬃcult to consistently capture customer needs

74(Release planned for March 2024)

and promptly reﬂect them in the product. Moving
forward, we will push ahead with in-house development
and build the service into a platform that transcends
conventional banking capabilities, oﬀering diverse value toindividual customers of the region.

◉ Hokkoku Digital Banking(Release planned for April 2024)

Hokkoku Digital Banking is an internet banking service
for corporate customers, and the project is under way tomake the service available in April 2024. As we aredeveloping this service in-house using cloud technology
and agile methodology, just like Hokkoku Cloud Banking,we expect it to be a platform that can consistently
provide better services.

◉ Integrated business platform (IBP)(Released in July 2023)

Integrated business platform (IBP) is an in-house systemthat centrally manages customer information andworkﬂows. It is a web-based platform that allows us todevelop hypotheses based on data analysis and othermeans to provide better proposals and services to local
customers. We have adopted cloud-native architecture as
Through 2023
HokkokuCloud
Banking2024

Service launched in 2019

Hokkoku Digital
Banking
Integrated businessplatform (IBP)
Digital regional
currency

2025

April 2024 (plan)
July 2023
FY2023 (plan)

API and BaaS
platform

March 2024 (plan)

Next-generationcore banking system

January 2026 (plan)

2026

Banking as a service (BaaS) refers to the provision ofbanking functionalities and services to business
operators via the cloud by opening up the application
programming interface (API) to external parties. We
plan to expand our service oﬀerings in stages,
starting with remote account opening and fundtransfer functions. We will also provide ﬁnancial
functionality-embedded apps tailored to speciﬁc
industries (including restaurants, various retailbusinesses, etc.).

◉Next-generation core banking system(Release planned for January 2026)

Our current core banking system already runs on a
public cloud, but since the software emulates thearchitecture of the on-premises era, we are unable totake full advantage of the potential of cloud technology.
As such, we began developing a next-generation corebanking system to deliver products of value to ourcustomers more quickly and to increase development
productivity. We plan to build from scratch a corebanking system that continues to grow with the latest
technology, employing modern programming languages,
microservices, and multi-clouds.

Initiatives for data utilization
We are also actively working on data utilization. In thepast, eﬃcient data use was diﬃcult because data wasdispersed across the core banking system andsubsystems. As we make progress developing various
systems in-house, we will centralize data managementin the cloud and propose optimal products and services
to our customers by integrating data with AI and othertools that continue to evolve. We also plan to utilize data
to prevent and deter fraudulent use of services.
At the same time, we are focusing on fosteringengineers who handle data. We have also established a

01
02
（6）
DX and System Modernization

Cloud 2.0
(2016‒2019)

S t ra tegy

Internetconnection

Cloud 1.0
(through 2015)

structure that allows appropriate analyses of aggregateddata by having employees from our business departments
take on reskilling to learn statistical analysis methods
along with programming languages such as Python.

St o ry

Phase

the design methodology for IBP, and our engineers andmembers of the business departments are tacklingagile development together as one team to provide
value to our customers. Going forward, we intend to rollout IBPʼs development style and architecture to otherin-house systems and create high-value products while
implementing operational reforms.

Stable service operation and convenience

We seek to provide both stable services and speedy andhighly convenient services that utilize IT, so that ourcustomers can use our Groupʼs services with greater
convenience, ease, and peace of mind. As part of thiseﬀort, we have posted the latest availability status of
the Groupʼs services on our website since November
2021. In January 2023, we started an initiative topromptly announce system failures via X(formerly
Twitter). We also focus on business continuity planning(BCP) for our services in the event of a system failure,providing alternative means and promptly restoring thesystem to minimize the impact on our customers.
Additionally, since FY2021, we have disclosed our service
availability targets and results categorized by theimportance of respective systems. We strive to improve
our service quality by proactively disseminating service
availability results and information on system failures
and taking remedial measures against such failures.

◉Constant disclosure of service
availability status

In the event of a system failure, we provide guidance on
alternative means, in addition to posting the latest service
availability status. We also post logs on past failures at all
times to promote visualization of systems-related
information.
Hokkoku Bank website (Japanese only)

https://www.hokkokubank.co.jp/other/notice/index.html

75

｜(6) DX and System Modernization｜◉Service availability targets and FY2022
results

99.90%(Approx. 8.7 hrs./year)(Approx. 44 min./month)(Approx. 88 sec./day)

99.50%(Approx. 43 hrs./year)(Approx. 3.6 hrs./month)(Approx. 7.2 min./day)

99.00%(Approx. 87 hrs./year)(Approx. 7.2 hrs./month)(Approx. 14.4 min./day)Most important

Availability

Evaluation

Core banking
systemMost
important

99.99%〇

Hokkoku Cloud
Banking

Important

99.92%〇

Hokkoku
Web Access

Important

99.98%〇

Aﬃliated merchantterminals for Hokkoku
Visa debit cards

Important

99.97%〇

Wallet app

Important

99.97%〇ATM

Important

99.95%〇

Passbook updatingmachineGeneral99.96%〇

Systems that aﬀect cash provision andsettlement of funds, for which noalternative means are available＊ All other services were available 100%.

Important

Cyber security

Systems that aﬀect cash provision andsettlement of funds, for which alternativemeans are available

GeneralSystems that impact customers,
excluding those classiﬁed as “mostimportant” or “important”

Internal

Systems that do not impact customers,
excluding those classiﬁed as “mostimportant” or “important”

Hokkoku FHD Group has been strengthening andpromoting security-related eﬀorts to protect customersʼ
valuable assets and information. We have internallyshared our vision on cyber security through what we callthe “security strategy story” to create an organization
where each employee takes security measures as apersonal responsibility. We also intend to help improve
the overall IT security of our local community by sharing
the Groupʼs initiatives with our customers and local
residents.

Security strategy story
Phase

Security 1.0(through 2013)

Security 2.0(2014‒2019)

VisionPursue security
through complete
separation from theoutsideAccept partial
connection with theoutside withconvenience in mind

Separation-type
defenseShared terminals

Perimeter defense
Terminals lent out
for individual use
Thin clientarchitecture

Technology

Security 3.0(2020‒2021)

Security 4.0(2022‒2024)

Security 5.0(2025 and beyond)Accomplish bothconvenience andsecurity

Enable collaboration
within the entire
supply chain includinggroup companies andIT partners

Contribute toregional DX throughsecurity

Introduction of zerotrust architecture＊1
Terminals lent out toall employees
Use of third-party
SOC＊2

Full implementation ofzero trust architecture
Consider introductionof SASE＊3
Bring SOC in-house

Beyond zero trustand SASE (use of
cutting-edge
technology)

Cyber security management structure
We address security risks through close daily
communication, utilizing the reporting system weestablished within the Group and the collaborative
framework we formed with external parties. In theunlikely event of an incident, a task force will beestablished and the Group-wide CSIRT will take actions
to quickly bring the situation under control.

Human
resource
development

Minimum training forinternet PC users

One-oﬀ security
training for all
employees

Regular security
training and bolsteredinformation
dissemination

Strengthen supply
chain management(boost group literacy,
promote education ofoutside contractors, etc.)

Promote security to
the region

Development
methodSecurity was low inpriority

Security considered
individually

Trial run of “shift left”＊4(considering security
from an early stage ofa project)

Full implementationof “shift left”
Promote DevSecOps

Share expertise on
security development

Organizational
structureHandled in a similarmanner as a natural
disaster

Built CSIRT
framework＊5

Strengthened CSIRT
activities by
establishing the
Security Group

External activities by
the Security Groupon a trial basis

Initiatives to share
information within theregion01
02
Approach to other ﬁnancial
institutions
The use of digital technology is indispensable to the
fulﬁllment of our corporate philosophy and brandphilosophy. Since our system strategy is an importantroadmap in this journey, we update it annually to keep itin line with the constantly changing world and ourcompanyʼs state of aﬀairs.
Many regions in Japan share the same conditions andare equally aware of the issues at hand. The challenges
are certainly not limited to Hokuriku, where we arebased. Regional ﬁnancial institutions that lead theirrespective localities are expected to take the initiativein resolving regional issues.
To raise the quality of each region, we hope tocollaborate with ﬁnancial institutions that share thesame values, providing our digital solutions andexchanging human resources with a view to mutuallyenhancing corporate value.

（6）

Financial Services Agency
and local ﬁnancial bureaus
Collaborate
Board of Directors

Group Strategic
Committee＊1 Zero trust: the concept of verifying each communication without distinguishing between internal and external communications and not trusting any. ＊2 SOC: short for“security operation center.” Refers to a center that monitors and handles security incidents around the clock, 365 days a year. ＊3 SASE: short for “secure access secureedge,” which is a security model proposed by Gartner, Inc. in 2019. An architecture for managing network and security functions together in the cloud. ＊4 Shift left: an
initiative to shift to the left side of the system development process ﬂow (i.e., deﬁne requirements→design→develop→test→operate), for instance, by designing with security
in mind from the initial stage of the project, and bringing in-house or automating the security diagnosis process (for the developed systems) from the development stage.
＊5 CSIRT: short for “computer security incident response team.” The team handles the processes of “identify, protect, detect, respond, and recover” as deﬁned by the NIST
Cyber Security Framework. Priority and depth of response are determined in consideration of the structure we have in place. Our CSIRT was established in April 2016.

76

Amid the constant evolution of cyberattack methods, it
is becoming increasingly diﬃcult to fully protect
systems and information from malicious attacks with
only conventional perimeter defense measures. For thisreason, the Group is working to implement security
measures based on zero trust architecture, which allows
ﬂexible responses to the evolution of attack methods
without hampering user productivity. Depending on thesystem and information we want to protect, we take ona hybrid approach of using both perimeter defense andzero trust as necessary to ensure security.
To improve productivity while simultaneously
bolstering security, we have shifted our approach to IT
environment control from a rule-based approach to one
that is based on principles. We will improve employee IT
literacy, a prerequisite for the principle-based approach,by providing support through continued education andmotivational activities, and at the same time enhancedetective controls such as log monitoring and behavior
detection based on the zero trust approach. Throughthese measures, we will build a safe and convenient IT
environment.

DX and System Modernization

99.95%(Approx. 4.3 hrs./year)(Approx. 22 min./month)(Approx. 44 sec./day)PriorityS t ra tegyService availability targets

Name

St o ry

To meet the diverse needs of our customers, we believe
it is important to maintain a balance between theprovision of stable services and the provision of
speedy and highly convenient services leveraging IT.
Accordingly, we have set targets on service availability
categorized by the importance of respective systems.
By sharing with our stakeholders this information,
together with the results, we will seek to provide
services of value that are both stable and convenient.

Our security philosophy

Availability of main services in FY2022

Bank of Japan

Task Force(established as necessary)
President

orPoliceGeneral Manager ofInformation Systems
Department, Hokkoku Bank

Instruct

ReportFinancials ISAC
and JPCERT/CC
Our IT partners

Group CSIRT
Risk Management
Subcommittee

Audit Department

ReportHokkoku BankManagement Administration
Department

General Planning
Department

Operational
departments
Information Systems
Department

Groupbusinesscompanies

Security Group77

Managing Executive Oﬃcer, General Manager of

Hokkoku Financial Holdings, Inc.

（7）

Aki Yokogoshi

Human Resource Development Department

eﬀorts have become widely known and are contributing to
the improvement of our organizational capabilities.

Business strategy and humanresource development strategy
Needless to say, human resources is the most important factor
in accomplishing our mission of becoming a “Quality Company,
Good Company.” As we continue to update our businessstrategy on a daily basis, the level of resources we require
becomes more sophisticated and specialized. Hokkoku FHD has
updated its human resource development strategy in line withthe business strategy, engaging in various initiatives aimed atdeveloping talent who can contribute to improving the regionʼsquality (see p. 100, “Story of personnel system reforms”).
Corporate culture is an indispensable element for our
employees to perform to the best of their abilities.
A ﬂat organization where employees can thrive
regardless of job level or age, and a corporate culturethat ensures employee the psychological safety toengage in discussions freely have underpinned ourendeavors in new businesses. As a result, Hokkoku FHD,
once considered an overly cautious company, is now
known for being an advanced and leading example of DX.
We have evolved from an organization of the Showa
period (1926‒1989) that valued a top-down and verticalculture to a ﬂat and agile organization of the Reiwa period(2019 onward). We are expected to think on our own andreach answers based on the constant communication we
engage in across teams and companies. As long as each
employee embraces integrity and has abundant soft skills,
the focus of our discussions is on “what was said” rather
than “who said it.” This approach leads to more meaningful
discussions, which serve as the driving force behind theCompanyʼs ability to rapidly advance innovations.
As we seek to improve the quality of the overall region, we
have introduced a unique career-based personnel system andhave put in motion a “human resource ecosystem” to nurture
professional talent who share and can contribute to our mission.

Initiatives for Human Capital-Oriented Management

When human capital-oriented
management bears fruit
There were a number of welcome news items in thespring of 2023.
In February, we received the Human Capital Leaders 2022
award, being selected as one of the top 10 companies out ofover 530 companies nationwide for our eﬀorts in humancapital-oriented management and information disclosure.
In March, following the certiﬁcation of Hokkoku Bank in
2022, Hokkoku FHD was certiﬁed as a White 500 company
under the 2023 Certiﬁed Health & Productivity Management
Outstanding Organizations Recognition Program. As aresult, we became widely known as a Group that values thephysical and mental health of its employees.
Furthermore, around the same time, we received theMinister of Regional Revitalization award at the 13th“Companies that Deserve to be Valued the Most inJapan” Awards. This award recognized us as a company
that valued its employees and their families, as well as its
customers, the local community, and shareholders.
Over the past 20 years, we worked to improve oursystems strategy and organizational capabilities, whilereforming our sales strategy. Following these eﬀorts, we
ﬁnally embarked on measures for our people, a key
endeavor, and introduced a career-based personnel
system. The accolades we received were a testament tothis endeavor bearing fruit, albeit gradually, and to its
positive reception by people outside the Company.
The book, Brushing Up Human Resources Energizes
Companies and Local Communities, published in August
2022, is the fourth book co-written by our employees. It gives
the details on our performance evaluation and personnel
system reforms, along with the background and theessentials that made our transformation possible. We used
to receive many questions regarding these areas in the past.
Today, we are receiving an increasing amount of feedback
noting that the book well explained why Hokkoku was able toaccomplish digital transformation (DX) and other advanced
initiatives at such a rapid pace. We are delighted that our78

02
S t ra tegy

Initiatives for Human
Capital-Oriented
Management01
St o ry

7

Aiming to develop humanresources that can contributeto improving the quality of
the region79

｜(7) Initiatives for Human Capital-Oriented Management｜

In March 2022, we updated our personnel system to a career-based personnel system.
In light of the changes in our social environment, we began discussions to update our personnel system from around 2018. Thisdeveloped into a full-scale project in the spring of 2020. What kind of personnel system matches the rapidly changing times that poseno clear answer? What kind of human resource development should we pursue? We explored answers to these questions one by one
and created a personnel system from scratch, rather than reworking the system at hand. During the creation process, we devoted
attention to the framework for supporting each employeeʼs career. This is a one-of-a-kind personnel system aimed at the eﬃcient
operation of our human resource ecosystem, the improvement of the regionʼs quality, and the fulﬁllment of our philosophies.

In recent years, the social environment surrounding the Company
has changed owing to the aging population and dwindlingbirthrate, as well as progress in digitalization and globalization.
Corporate business models have also evolved. Against thisbackdrop, customer needs have also diversiﬁed and specialized.
In the past, we were expected to perform traditional banking
operations with accuracy and certainty. Today, we are expected
to see the customerʼs business model from a birdʼs eye view andprovide specialized support and other highly value-added
services based on each customerʼs conditions. To address suchneeds, we had to move away from a traditional seniority-basedorganization and build one that could create innovations throughthe collaboration of diverse talent. We needed to create asystem through which diverse personnel could hone theirskills and exert their strengths to improve the regionʼs quality.

Quality Company, Good Company.

Human resources who can contribute to improving the regionʼs quality

Delivering
talentRecruitment

Hokkoku FHD
human resource
ecosystem

Organization

Wellness

CareerLearning

trat
ss s
ine
bus
Dʼs
FH

Integrity

A person with integrity is a person who is honest, sincere, earnest, and noble.
These are the qualities that employees of Hokkoku FHD must strive for.
Our mission and raison d'être are to prioritize the values we provide andact to beneﬁt people and the world.

ce

Hok
kok
u

Soft skills

Soft skills, which are necessary in various forms of communication
to mobilize people and teams, help advance our business activities
smoothly. At Hokkoku FHD, we have put in place 20 behavioral
principles that summarize how we should act.

our
res
an gy
um
e
ʼs h t stratHDu F pmenkoklo
Hok deve

Corporate culture

Lively communication and collaboration are premisedon Hokkoku FHDʼs corporate culture that encourages
a ﬂat organization and psychological security.

Hokkoku FHD structure
Customer-driven approach

Under the previous personnel system, we adopted a wage
structure in which the concept of role-based grading waspartially incorporated into the so-called ability-based grading
system. However, we did away with the previous scheme andtransitioned to a wage structure that focused on the four
elements of skill, role, productivity, and level of contribution.
Under the new framework, we determined ﬁnal wages based oncompany-wide dialogue, collecting feedback from the leader(superior) in the employeeʼs own department as well as leaders
and related parties of other departments the employee hadinteractions with. Through this transition, we were able toeliminate the trace of seniority based on length of service
prevalent in the ability-based grading system, and moved closer
to a wage system that is based on roles and the values provided.

Career-based
personnel system

Career reviews to foster employees and encourage
autonomous career development
Wage determination based on dialogues focusing onroles and provided values
Reform of retirement payment scheme to suit
greater labor market ﬂuidity◉Career reviews to foster employees andencourage career independence

For an organization to grow in times of rapid changes, its
employeesʼ individual growth becomes important. Employees
are expected to proactively think of their own career plans
and use them to achieve personal growth.
In support of this, we have introduced career reviews, amechanism for reviewing each employeeʼs work (actions) tohelp them fulﬁll their expected roles in the Company andrealize their career goals. We eliminated the conventional
performance appraisal and personnel evaluation systems.
Instead, we created a system that focuses on dialogues for
growth and autonomous career development, rather thanevaluating employees based on quantitative metrics.

Image of our career review
Career plan

Expected roles
Business strategy
Divisional strategy
Project strategy

Employees set their own goals
Review

80◉Wage determination based on dialogues
focusing on roles and provided values

Three key features of the career-based
personnel systemegyWork styles

Reasons for upgrading the personnel
system01
02（7）
Initiatives for Human Capital-Oriented Management

We deﬁne our human resource ecosystem as a comprehensive framework for human resource development spanningrecruitment to development and preparation for a second career after retirement.
Integrity forms the foundation of our human resource development strategy. In hiring and utilizing human resources,
integrity becomes an indispensable element. Furthermore, personnel with the soft skills embodied in our 20 behavioral
principles create a corporate culture rich in communication and collaboration. Only with this corporate culture can ourhuman resource ecosystem work eﬀectively.
The starting point of our human resource ecosystem is the recruitment of people with diverse values who have anaﬃnity with our corporate philosophy and brand philosophy. As the people we hire tackle their own career plans, we
provide them with opportunities for learning and help them maintain their physical and mental health (wellness). To
enable more ﬂexible work styles, we continue to update related systems with a view to creating a ﬂat organization where
everyone can thrive. As a result, those talent who have acquired various experience and skills at the Company take oﬀ
as top executives of local companies to exert their strengths and improve the quality of the region.

S t ra tegy

Hokkoku FHDʼs career-based personnel system

St o ry

Hokkoku FHDʼs human resource ecosystem◉Reform of retirement payment scheme tosuit greater labor market ﬂuidity

Under the previous personnel system, the trace oflength-of-service-based seniority stood out even more in the
lump-sum retirement payment scheme than in the wage structure.
Today, resources are moving with greater ﬂuidity, and to attract talent
with diverse backgrounds, we had to fundamentally change the system.
In line with the elimination of length-of-service-based seniority
from wage determination, we made a bold amendment to add acertain percentage of the retirement payment (originally slated
for lump-sum payment) to monthly wages. Since wages no longer
reﬂect seniority based on length of service, this aspect also holds
true for the portion of retirement payment added onto monthly
wages. This has enabled us to put in place a wage structure inwhich mid-career hires can play an active role without being
disadvantaged by their shorter service years. In this way, we wereable to lay the groundwork for welcoming diverse talent.
We named the portion added to the monthly wages “career support
incentives.” By contributing the sum to a deﬁned contribution pension
plan, employees can now prepare for their future life plans or invest in
various learning opportunities for themselves. The framework has
truly transformed into one that supports the career of each employee.

81｜(7) Initiatives for Human Capital-Oriented Management｜｜Recruitment

Quality Company, Good Company.

Organization
Work styles

Recruitment
CareerLearning

Wellness

Introduce career-based
personnel system

New grad.

Mid-career

Casual interviews withyoung employeesNew
graduates

Placements in line with career plans

Instead of holding a traditional entrance ceremony, in
April 2022, we began hosting welcome meetings, whichallow new hires of each group and our president tocommunicate interactively in an informal atmosphere.
The welcome meetings have taken root as anopportunity for new hires to engage in dialogue anddeepen their understanding of the Groupʼs goals andstrategic objectives.

In line with the career-based personnel system, whichenables employees to map out their own careers, in
2022, we introduced an initiative to assign new graduate
hires to jobs of their choice after having dialogues withthem. As a result, new graduate hires in 2022 showed
high engagement with a one-year retention rate of 100%.
New graduate hires and three-year retention rate

（People）
60
40
30

91.7％

81.8％

82.5％

55

57

48

FY2018FY2019FY2020

91.2％

100％

80.0

20
10
0

（%）
100.0

34

17

FY2021

FY2022(2-yr. retention) (1 yr. retention)

Number of graduate hires
Retention rate (employees who stayed/total hires)

Shuto Okada (joined in 2022)
Audit Department, Hokkoku FHD

I decided to join Hokkoku FHD, thinking that it would
most allow me to contribute to the progress of the region
where I was born and raised.
During the training period, the Company held
department presentations to explain the operations ofeach Group company and department. This opportunity
gave me a good idea of the actual work involved.
The Audit Department was my ﬁrst choice for the82

assignment because, considering my future career, I
wanted to see with my own eyes the resources Hokkoku
FHD had to oﬀer in its entirety.
I had thought that all new graduate hires would
be assigned to corporate sales (Corporate Banking
Department of Hokkoku Bank), so I was very surprised
when I found out that the Company accepted my wishes
and assigned me to the Audit Department.
As I lack work experience, I need to make continuous
eﬀorts to hone my skills. That said, I am very satisﬁedwith my work and sense that I am growing every day.
In the future, I hope to use my experience in the Audit
Department and work to improve the corporate value of
our customers. By doing so, I would like to contribute to
the sustainable growth of our region.

New grad. Mid-career・Welcome meetings

・One-on-one interviews
after joining

・Casual interviews with businessdepartment employees
・Company tours

Senior oﬃcers

Introduction of career-based
personnel system

Mid-career
hires

Amid increasing labor market ﬂuidity, we have changed ourretirement payment scheme, introduced a system to determine
wages based on dialogue (eliminate length-of-service-based
seniority), and put in place an environment where employees ofdiverse backgrounds can take on active roles without being
disadvantaged by their shorter service years.
In terms of job categories, we are receiving many applications
from people in the systems, consulting, and design ﬁelds, and adiverse group of talent continues to join our team with a view toenhancing the regionʼs quality. We make a conscious eﬀort toachieve a mid-career hire ratio of at least 50%.
67.3％

（People）
50
40
30
10
0

25.0％

New grad.

32.0％

16

16

35

FY2020

FY2021

FY2022

Number of mid-career hires

Mid-career・Placements in linewith career plans

（%）
50.0

0.0

Mid-career hire ratio

Introduction of discretionary
labor system for specialized work

Mid-career
hires

When Hokkoku FHD shifted to the career-based personnel
system in March 2022, it made the rules of employment andcompensation systems uniform throughout the Group.
Additionally, some Group companies have adopted the so-called
discretionary labor system for specialized work to attract specialist
talent with advanced skills. The intent is to have in place a ﬂexible
hiring structure that meets the work styles, compensation
schemes, and other needs of the desired candidates.

・Reform retirement payment scheme・Introduce discretionary labor system

Improve employee engagement
President

Mid-career hires and hire ratio (mid-career hires/total hires)

60.0

New grad.

・Raise starting salary(¥264,000/month)

Join the Company

HR staﬀ

20

To the job of my choice in the
Audit Department following
department presentations

New grad. Mid-career

Mid-career

・Conﬁrm their awareness of regional issues (ES)・Distribute videos of presidentʼs speeches

Application to selection

Recognize Hokkoku FHD

50

（7）

New grad. Mid-career

・Recruiting activities by each Group company
・Direct recruiting

Referral-based
hiringOpportunity to meetwith diverse talent

Introduce discretionary laborsystem for specialized work

ReferralEﬀorts in the selection phaseNew
graduates

In recruiting new graduates with abundant potential, we
emphasize whether what the candidate wants to accomplish
through work matches the corporate and brand philosophiesof Hokkoku FHD, and whether we share the same aspirations.
We check candidatesʼ aspirations from diﬀerent angles
as we go through the application sheets and conduct
interviews. We want to meet students who consider
regional issues as their own personal matters and are
keen to confront such issues. Hiring new graduates is along-term investment for us. Since they are the sourceof our future creativity, we also place importance on theirattitude and willingness to continue learning.

Initiatives for Human Capital-Oriented Management

New grad.

02

Source of creativity
and innovation

・Conﬁrm shared aspirations
through interviews

Mid-career
hires
New
graduates

Welcome meetings with new graduate hires (top photo; April 2023)
and with mid-career hires (bottom photo; May 2023)

Conduct placements alignedwith career plans

New grad. Mid-career・Introduce Companyʼs
appeal through internships

Share/have aﬃnity withcorporate philosophy
and brand philosophy

Host welcome meetings

01
S t ra tegy

Humanresource
ecosystem

Establish various contact points
during the hiring process

・Information disclosure via
website and integrated report

During the process from application to selection and joining theCompany, we aim to establish multiple touchpoints between thecandidates and our people, including our president, to conﬁrm
whether the candidates truly have an aﬃnity with our corporate andbrand philosophies, or said diﬀerently, share our aspirations. Throughthis eﬀort, we ensure that the candidates remain highly motivatedand perform to the best of their abilities after joining the Company.

Hosting welcome meetings

Delivering
talentHuman resources who cancontribute to improving
the regionʼs quality

St o ry

Human resources who can contribute toimproving the regionʼs quality

We seek to broaden our scope of collaboration and create innovation by hiring
people who can have an aﬃnity with our corporate and brand philosophies.
We do not necessarily depend on new graduate hires. Instead, we consciously
focus on mid-career hires based on the belief that diverse backgrounds canbe a force that drives innovation.
Ideal candidates for the Company are those who possess integrity andﬁrmly relate to our corporate and brand philosophies. In other words, we arelooking for teammates who share our aspirations and will work together with
us for the betterment of society and peopleʼs lives. It is also important forthem to be true professionals with the expertise and visionary thinking tocontribute to the enhancement of the regionʼs quality, and with the persistence
to consistently hone their skills toward the creation of new values.

Establishing various contact points
during the hiring process

Story of Recruitment

New
graduates

Increasing contact points with students
The applicant-to-hire ratio serves as a metric to assess
the Companyʼs recognition. Our applicant-to-hire ratio for
new graduate hires has been on the rise in recent years,
but according to our analysis, the ﬁgure reﬂects both the
declining number of hires and the lack of interest in
regional ﬁnancial institutions on the part of students. We
plan to further promote Hokkoku FHDʼs appeal as acompany where employees can participate in projects
that transcend the traditional banking framework.
New graduate hires and applicant-to-hire ratio（People）
50
40
30

9.1
6.2

6.0

57

48

34

FY2019FY2020

FY2021

11.1

11.6

17

11

10.0
5.0

20
10
0

(Ratio)0.0
FY2022
FY2023
Applicant-to-hire ratio
Number of new graduate hires

83｜(7) Initiatives for Human Capital-Oriented Management｜｜Careers

Quality Company, Good Company.

Delivering
talentOrganization
Work styles

Human
resource
ecosystem

Wellness

Recruitment

CareerLearning

One-on-one interviews with all
employees

For an organization to grow amid changes in the social
environment and the diversiﬁcation and specialization ofcustomer needs, it is necessary to develop professionals
who can contribute to improving the quality of theregion. To accomplish this task, we believe that employees
must design their own career plans and work toward
fulﬁlling their visions proactively and with great
enthusiasm.
There is more than one career direction, and there isno one right answer. If we liken careers to a mountain,
each personʼs choice of which mountain to climb (high,low, or steep), the route to the summit, the speed of theclimb, and necessary preparations will diﬀer considerably
based on the personʼs values and perspectives. Likewise,
we hope to see all our employees constantly explore
their goals and answers, make their own decisions, andtake the initiative in developing their own careers.
Through such eﬀorts, we believe the Company can
become an innovative organization rich in diversity andcreativity.
For employees to develop their own careers, we ﬁnd
it important to help them understand themselves,
understand their work, and have opportunities tocommunicate with a wide variety of people. To this end,
we are working to establish various systems andintroduce new initiatives.
Moving forward, we will continue to support ouremployees so that they can choose their own careers,
proactively make eﬀorts in their career journeys, andachieve personal growth along the way.

As the ﬁrst step toward autonomous career development,
in 2019, we began conducting one-on-one interviews
with all employees, thinking that it was important forthem to ﬁrst understand themselves and to learn how tomake the most of who they are.
According to our records, we conducted over 42,000
one-on-one interviews in FY2022. Our eﬀorts in promoting
autonomous career development for each and every
employee are taking root.
One-on-one interviews are regular meetings between
leaders and members, conducted at least once a month.
In these meetings, it is important to give members an
opportunity for discovery. We see these meetings asopportunities for members to understand their own
interests, thoughts, and values. Accordingly, we provide
support so members can learn about themselves,envision their own goals and aspirations, and takeaction to accomplish them.

Career visualization via My
Career, an in-house-developed
HRM system
To foster our resources and promote autonomous careerdevelopment, in February 2021, we introduced “My
Career,” an HRM system developed in-house. My Career
allows us to consolidate and visualize various information,
including employee proﬁles, skills, career plans, andwork experience. Since everyone can look at theircolleaguesʼ career plans and their eﬀorts towardachieving them, the system greatly stimulates our
employees. Also, information on individual departments
and the required skill sets, as well as hints on
self-development, are posted on My Career, and it
serves as a tool for our employees to contemplate theircareer moves.

Introduce collaboration
program

Foster awarenessabout career

Human resources withautonomous careerdevelopment

Expand ﬁelds where female
employees can thrive
Support careers of athletesDiversity and inclusion

Active roles for employeeswith disability

Collaboration program

To provide regular opportunities for our employees togive serious thought to their careers, we hosted our ﬁrst
Career Month in November 2022, designating it as aperiod to think and act on career issues in a focusedmanner. During the month, we oﬀered career design
training and disseminated career-related information.
Our second Career Month, held in May 2023, featured
career-related roundtable talks and tailor-made careerinterviews where employees could have a one-on-one
meeting with anyone in the Company.

To support employeesʼ careers and encourage them totest their own potential, we have introduced what wecall a collaboration program through which employees
can take on side jobs within the Company. Since thelaunch of this program in October 2020, a total of 526
employees have taken on side jobs in 47 projects.
Of this number, 15 participants have moved to thedepartments where they engaged in side jobs via thecollaboration program and started their new careers.
The program serves as a good stimulus for the
departments accepting applicants for side jobs as well,because it helps generate concepts and ideas that cannot
be created by the departmentsʼ own staﬀ alone.
We plan to regularly implement this program to help
employees grow and accomplish their career plans, andto contribute to active discussions and innovations within
the organization by encouraging collaboration of diverse
talent.

We held career design training sessions to provide an
opportunity for employees to give serious thought totheir careers and map out their career plans proactively
and strategically. In this training, attended by about 130
employees, the participants reviewed their own careers
to date and took part in group discussions with other
employees with whom they have little interaction in
their regular jobs. Many participants commented thatthe training gave them a fresh opportunity to reﬂect on
their past and see their own progress and growth. They
also said that in the group discussions, they heard theideas of people from diﬀerent departments and age
groups and were exposed to perspectives diﬀerent fromtheir own. We will continue to foster career awarenessand nurture personnel who can drive their own careers.

Tailor-made career interviews
We provided opportunities for one-on-one meetings
between our employees, calling them tailor-made careerinterviews, so that our employees can learn about
Hokkoku FHDʼs wide range of business operations andgain hints for their own career plans.
Based on an application system, a sales department
employee, for instance, could have an interview with a systems
department employee, or a regular employee could have aninterview with managers in other departments. In such a way,these meetings provided an eﬀective opportunity for dialogue
between employees in diﬀerent positions and roles.
Gaining diverse knowledge on other employeesʼ values,
experiences, skills, and job areas has motivated our people
to envision their own careers and take the ﬁrst step toward
the achievement of career goals.

02（7）

Career Month

Career design training

01

Initiatives for Human Capital-Oriented Management

Employeesʼ autonomous careerdevelopment

Conduct a Career Month

Human resources who cancontribute to improving
the regionʼs quality

S t ra tegy84

Human resources who can contribute toimproving the regionʼs quality

CareerSt o ry

The coming era is one that focuses on individual careers. In times of dramaticchanges, there is no one right career. People are expected to come to grips
with their own careers, constantly keeping them in thought. At Hokkoku FHD,
we value each employeeʼs wish to explore areas of interest, and do not takethe lead in deciding the career direction. Instead, we seek to provide support
by working alongside our employees in their career development eﬀorts.
We also believe that progress in the career development of diverse resources
maximizes the energy generated in collaborations. As such, we are also working
to support career development from the perspectives of female empowerment,
active roles for athletes, and active roles for people with disabilities.
By supporting career development, we hope to motivate our employees, generatehigh engagement, and contribute to the betterment of our local community.

Story ofSample case in
the PR & IR Section
Participants of thecollaboration
program created aninternal magazine.

Career support team
In May 2021, we established a career support team tosupport our employeesʼ autonomous career development
through the professional perspectives of career counselors.
We have put in place a system that enables career
counseling with qualiﬁed career counselors within the
Company, providing employees with opportunities toreceive advice on career-related worries and concerns
from a third-person point of view.
The career support team uses dialogue to extract
information on the counseleesʼ interests and concerns,
encourages self-reﬂection, and works alongside the counselees
so that they can envision their career goals and take action.
Through this initiative, we support our employees intheir individual endeavors to live actively, being satisﬁedwith their work and private lives, and to pursue theirvision with enthusiasm.

85

｜(7) Initiatives for Human Capital-Oriented Management｜

Expanding ﬁelds where female
employees can thrive

46.3％

20.3％

3.6％

Target:Challenges
Generalstaﬀ

ChiefsManagers

50％

ExecutiveoﬃcersFemale managers active in diverse job areas
In addition to job levels, diversity in job areas is anotherimportant factor for female empowerment in the workplace.
We had our ﬁrst female manager in April 2012, and today,
the number has increased to 75. The scope of job ﬁelds inwhich our female managers take on active roles has
expanded, starting with the operations departments, andmoving into the personal and corporate consulting
departments, as well as project planning departments.
That said, we feel that the relatively high concentrationof female managers in the traditional banking andpersonal consulting space remains an issue.
To increase the ratio of female executive oﬃcers(management talent), a challenging endeavor, we see the needto create opportunities in the project planning departmentsthat are considered to be closer to management, and we hopeto achieve this through resource placements going forward.

86

March 2018 2

45

20

26

(Total: 75)

10 (Total: 32)
Expanding in both
number and ﬁeld

1

March 2013
(People)0

Operations
departments

10

20

30

40

Personal consulting
departments

50

60

70

Hokkoku FHD is home to a handball team called Hokkoku
Bank Honey Bee, which has won the Japan Handball
League title for nine consecutive seasons. The players
work in the oﬃce during the daytime and spend time on
the handball court during the evenings, serving as bothbusiness people and athletes. To ensure a smoothtransition following their retirement as athletes, we
support their career development as business people.

80

Corporate consulting
and planning departments

Training to develop soft skills
We conducted soft skills development training because
many female employees face challenges in soft skills,
including those in communication, facilitation, and logicalthinking.
Some 66 participants, mostly female managers, engaged
in a curriculum designed to improve communication andfacilitation abilities, as well as the ability to resolve
problems based on hypothesis-based veriﬁcation andlogical thinking. The knowledge acquired through thetraining has been applied to developing team strategies,
contributing to team management.

Aiming to become a top executive
or entrepreneur thanks to an
opportunity for learning
Fumiha Araki

Accounting and Administration
Department,
BPO Management, Ltd.

When I became a group leader, which is amanagement position, I began carrying a vague senseof anxiety toward my future career. At that time, I
came across an internal posting regarding enrolment
in a graduate school (MBA program), and decided
to apply, hoping to systematically learn about
management.
Attending graduate school while raising a child
was a major challenge, but with the support of myfamily, I am looking to graduate next spring.
There is a virtuous cycle of input and output as I put
the knowledge I gained at school into practice. The
most rewarding aspect of my MBA experience has
been the exposure to diverse perspectives and values
through discussions with my classmates outside theCompany. Such exposure has widened my viewpoint.
I have also listened to the stories of top executives
who are professionals in corporate revitalization, andschoolmates who plan to start up their own
businesses. These opportunities have brought me
closer to the possibility of becoming a top executive oran entrepreneur and I began envisioning this path as
my career plan. Currently, I am making eﬀorts to
exhibit ownership in a side job involving social
contribution activities. Within the Company as well, I
hope to show ownership and entrepreneurship andbecome a leader capable of providing value to society.

Athlete engineer̶fromaspiration to reality
Yuki Yoshidome

Information Systems Department,
Hokkoku Bank
Hokkoku Bank Honey Bee #17

Q１．
Why did you want to work in the Information
Systems Department?
When I was considering job options in the oﬃce, I
was attracted to the word “athlete engineer.” Itsounded interesting and I genuinely wanted to giveit a try. When faced with making a choice, I havealways chosen what sparked joy. I had great
expectation in exploring uncharted waters andapplied for a position in the Information Systems
Department.
Q2．What does your job in the Information
Systems Department entail?
During the ﬁrst year after being placed in thedepartment, I was enrolled in an engineer
development curriculum created for athletes. I
started with simple training tasks, writing some
programming codes and displaying and adjusting
images, while also learning the basic knowledge
required for systems work. As the next step, I
created a travel website, and as the ﬁnal project, I
developed my own web system. As the curriculum
progressed, I came across programming languages
that I had never seen before, and struggled tounderstand their meanings and functions. I had
zero knowledge of systems when I started, but by
the end of the curriculum, I felt conﬁdent that I had
acquired the skills and perspective on an engineer.
Q3．How do you envision your future career?
I have been playing handballfor 14 years, devoting morethan half of my life to the game.
Therefore, my original wish
was to become a teacher andteach handball after retiring
as an athlete, but now, I am
also considering a future as
an engineer. Becoming ateacher had been my only choice in the past, but
after joining the Company, I was introduced tosystems work and was able to discover new
potential within myself as I continued my studies towork as an engineer. Moving forward, I would liketo utilize my strong communication skills and growfurther as an employee of Hokkoku FHD.

We have in place an environment where both people withand without disabilities can take on active roles in theworkplace together, and where employees with diverse traits
can work in a manner that suits their individual aptitudes.
We do not consider disability as a handicap, and seek
to support people with disabilities from recruitment toempowerment in the workplace, based on our employment
policy for people with disabilities.
Employment policy for people with disabilities
Promoting employment of people with disabilities
and diversifying human resources
Build structure that accepts diverse values bypromoting employment of people with disabilities anddiversifying human resources
Addressing the individuality of people with disabilities
Develop a rewarding work environment that allows
people with disabilities to work in a manner that suits
their individual aptitudes.
Understanding and spreading employment of people
with disabilities
Build an organization that regards disability as auniqueness, recognizes people with disabilities
individually, and provides opportunities for them to thrive

Ratio of employees with disabilities

2.86％

At least
3.00％

March 2023

Target01
02（7）
Initiatives for Human Capital-Oriented Management

74.9％

4

Active roles for employees withdisabilities

S t ra tegy

Ratio of female employees by job level (March 2023)

March 2023

Supporting the careers of athletes

St o ry

Bringing together people of diverse values andperspectives gives rise to multifaceted and creativeideas that lead to innovations. We support womenʼsempowerment so motivated employees can perform to thebest of their abilities regardless of gender. We willcontribute to value enhancement by allowing everyone to
maximize their potential and thrive, maintaining a balance
between work and personal life without putting careers on
hold even during childbirth and other important life events.
The percentage of female chiefs in management roles as
leaders has reached 46.3%, accounting for nearly half of thetotal, reﬂecting a year-by-year increase in women taking
active roles within the Company. The ratio of female
managers stood at 20.3%, which is less than half of thetotal, but still an 11.1% uptick from ﬁve years ago. This also
indicates a steady increase in ﬁelds where female
employees can thrive. Meanwhile, there were only two
female executive oﬃcers (3.6% of the total) as of March
2023, and we understand this to be an issue to be addressedgoing forward in the area of female empowerment.
We believe a greater representation of women taking
on active roles and a diverse workforce lead to innovation.
Accordingly, we intend to increase the number of female
employees involved in decision-making within theorganization, and continue to promote their growth into
professionals equipped with a management perspective.
We will not limit the scope of opportunities for motivatedand ambitious women, and instead provide them thenecessary support to take on career-oriented challenges
and gain diverse experiences.

Number of female managers by department

Making full use of anenvironment where anyone
can take on challenges
Hiroki Uzuhashi

Operations Department, Hokkoku Bank

I decided to join Hokkoku FHD because many
people with disabilities worked at the Company,as it oﬀered physical accessibility, such as
barrier-free facilities, as well as understanding andconsideration for people with disabilities.
After joining, I was assigned to the operations
center that oversees Hokkoku Bankʼs administrative
operations. There, I handle administrative work
associated with loans for individual customers,
taking care of the series of tasks from checking
customersʼ application details for various loans towiring the funds. I had no prior work experience ata ﬁnancial institution, so I became confused attimes during the ﬁrst few months. However, thanks
to my colleaguesʼ kind and thorough support, I
became accustomed to the job and now ﬁnd it
enjoyable and fulﬁlling.
In addition to banking, Hokkoku FHD has Group
companies in a variety of ﬁelds and oﬀers a wide
range of services. In the future, I hope to build on
the skills I have cultivated to date and explore
various job areas, stepping up my eﬀorts so that I
can contribute to the local community.

87

｜(7) Initiatives for Human Capital-Oriented Management｜｜Learning

Quality Company, Good Company.

Recurrent education atuniversities and graduate schools
We believe that the typical skillsets required in banking
operations are not enough to develop employees whoare highly marketable in society and can be sent out tothe local community as management talent. In fact, these
individuals will need to obtain a wide range of skills. At
Hokkoku FHD, we focus on developing talent ﬁt for the
VUCA era by expanding the ﬁeld of learning to universities
and graduate schools (MBA programs) as well.
Learning at universities and graduate schools is diverse,
spanning themes from management strategy, marketing,and business plans, to leadership, allowing our employees
to obtain a wide range of skills.
Our employees also have opportunities to output theresults of their learning, through giving a presentationon the business plan they worked on in their graduation
research and other projects. At times, the Company gets
ideas for new business development from thesepresentations, so these initiatives lead to innovationand the sharing of learning within the organization.
Number of employees currently enrolled in or havecompleted university or graduate school (MBA) programs

88

Currently enrolled

Completed

March 2021

13

0March 2022

22

5March 2023

22

11

Organization
Work styles

Human
resource
ecosystem

Wellness

Recruitment
CareerRecurrent education at universities
and graduate schools
Emphasize learning via
interaction with outside parties
Support eﬀorts to learn
Formulate skill maps

Learning

Graduate study that helps
career development
Hideaki Yabuno

Executive Oﬃcer and General Manager ofLife Planning Department, Hokkoku Bank
Director and Executive Oﬃcer, FDAlco, Ltd.
(Completed an MBA program in March 2022)

It was incredibly diﬃcult to balance my MBA studies
with work and family life. Still, the input and output
of knowledge and the deep analysis and reﬂection I
continued during the program allowed me to grow,and the experience was very meaningful to my career
design, so I am very happy that I took on thischallenge. The MBA education gave me the ability
to see things from a birdʼs eye view and grasp theessence, instead of being trapped in the details.
This skill has proven extremely valuable in mycurrent position. I can conﬁdently recommend thislearning experience to my colleagues. Additionally,
the Companyʼs tuition subsidy* program pushed myback to pursue education, and I am deeply gratefulfor the wonderful initiative.
＊Tuition subsidy: The Company subsidizes two-thirds ofthe graduate school tuition (over ¥2.0 mn)

Learning that focuses oninteraction with outside parties
To become marketable, a person must have businessskills that are applicable anywhere. We actively utilize
external content so that our employees can acquire
such business skills. We seek to achieve innovation by
giving our employees the business skills needed forvalue provision within and outside the Company, suchas the ability to build ideas and derive answers.
We also believe that these types of business skills aremostly obtainable through interaction with people
outside the Company. Such external learning is likened
to “matches between diﬀerent schools.” Our employees
acquire knowledge and also gain the ability to put things
into practice by repeatedly engaging in discussions withand providing output to outside parties.
The personal networks developed through theseinteractions continue on even after the learning sessions,allowing our employees to remain inspired by talentacross a variety of industries.

Relearning for the eraof VUCA

01
02

Develop professional
talentOptimization of humanresource portfolio（7）

Supporting eﬀorts to learn

Establishment of skill maps

Partial subsidies for the cost of learning

Needless to say, portable skills are important. However,to develop professional talent, it is also important toimprove the hard skills that directly impact oneʼs work.
Hokkoku FHD has established a system called skill
maps that clearly indicate the hard skills required in aparticular job area. In this system, an employeeʼs hardskill levels, for instance, in corporate consulting, personal
consulting, or digital/IT are determined based on the
two axes of knowledge and the ability to put the skills
into practice.
Skill maps give a clear image of the required skills
vis-à-vis the career plans of individuals, so based on
this information, employees can ﬁnd out exactly what
they need to learn.
From the Companyʼs perspective, the system can beused to optimally align the human resource portfoliowith management strategies or to plan personnel
development strategies.
Since the system has only been in operation for ashort period, the current scope of skill maps is limited toonly certain business areas, but we intend to gradually
expand the coverage to optimize our human resource
portfolio and implement strategic personnel development.

We have been able to secure the time for learning by
reducing overtime through improved productivity. To
develop professional talent, we also have in place apartial subsidy program. Under this program, the Company
subsidizes around half to two-thirds of the tuition forproactive learning eﬀorts, including the acquisition ofdiﬃcult qualiﬁcations and participation in externallearning opportunities. The remaining portion is coveredby the employee. We believe that an appropriate ﬁnancial
burden on the individual will engender a more proactive
stance toward learning and result in greater success.
Total human resource development expenses* andnumber of assisted employees(￥ mn)
8,000

339

248

7,000
6,000
5,000

207

138

employees￥50.0 mn

employees

employees

employees￥58.0 mn

￥66.0 mn

￥73.0 mn4,000

FY2019FY2020
FY2021
FY2022＊Total human resource development expenses: Total subsidies forthe cost of learning and fees

Open application-based and portableskills-oriented training
Since we emphasize self-driven learning, in principle, wepost training opportunities publicly and expect ouremployees to apply on their own. By having them proactively
choose what to learn, we encourage learning that is inline with the achievement of individual career plans.
Examples of Hokkoku FHDʼs training include sessions
to acquire problem-solving skills or to understand andpractice DevOps to improve team performance.
Furthermore, in addition to acquiring portable skills,
we believe that studying liberal arts such as social
sciences and humanities can improve oneʼs free
thinking and actions concerning business management
and organizations. Accordingly, these disciplines arealso included in our training lineup.

Initiatives for Human Capital-Oriented Management

Human resources who can contribute to improving theregionʼs quality: Hokkoku FHD deﬁnes such talent as
professional talent, and positions it as a goal for its
employees.
Said diﬀerently, professional talent is a person who
possesses the knowledge and experience to generate
new values in the region, and can continue to learn sothat such knowledge can be updated to match the times.
In our deﬁnition, learning comes with the keyword“autonomous.” We encourage our employees to engage
in learning on their own initiative rather than being
urged to do so by the Company.

Delivering
talentHuman resources who cancontribute to improving
the regionʼs quality

S t ra tegy

Development of professional
talentHuman resources who can contribute toimproving the regionʼs quality

Learning

St o ry

Learning is an essential factor in creating human resources who can contribute toimproving the regionʼs quality. Hokkoku FHD oﬀers its employees a place forlearning based on the career plan designed by each individual. We emphasize learningthat match the era of volatility, uncertainty, complexity, and ambiguity (VUCA), moving
away from being overly focused on the banking business. We also actively encourageinteraction with outside parties. In addition, we support employees who take on recurrent
education proactively, and more than 30 employees are currently engaged in relearningat universities and graduate schools. What they learn is shared and accumulated within
our organization as collective knowledge, which leads to innovations. In 2022, welaunched an initiative to achieve a more sophisticated level of skill visualization,
which would allow us to know where and what kind of skilled personnel exists within
the Company. We plan to use this information to optimize our personnel portfolio inline with our business strategies and develop our human resources strategically.

Story of

Status of learning activities
At Hokkoku FHD, each employee proactively engages inlearning to fulﬁll their career plans.
A study conducted in January 2023 showed that roughly
85% of employees took part in learning activities in theirareas of interest. For us to contribute to the improvementof the regionʼs quality, learning is essential. Moving
forward, we will press on with our eﬀorts to strengthen
learning activities for our employees in terms of both
quality and volume.
Status of learning activities (people)

January 2023 survey with 1,634 participants(multiple answers accepted)
Obtained qualiﬁcation

728

Took courses

628

Engaged in reading

931

Other

261

None

239

89

｜(7) Initiatives for Human Capital-Oriented Management｜｜Wellness

Quality Company, Good Company.

RegionHokkoku
FHD
Employees

Realization ofa sustainable
societyEnhance the quality of the region
Spread health and productivity
management to the region

Provide added value to the region in
the medium to long term
Realize an energetic and fulﬁlling daily life where
employees are physically and mentally healthy andcan work with vigor and peace of mind

According to an in-house survey conducted to evaluate thepenetration of health and productivity management within the
Company, 74.2% of the respondents gave a positive responseto the statement, “the Company cares about employee health.”
Including the neutral responses (“neither”), over 95% of the
respondents showed a certain level of understanding of theCompanyʼs eﬀorts toward employee health.
We will continue our eﬀorts and announcements
regarding health and productivity management so that the
number of employees giving negative responses can be
reduced to as close to zero as possible. We believe that this
PDCA cycle will enhance the proactiveness of our employees
who are central to this eﬀort and lead to a more eﬀective
implementation of health and productivity management.

90

Organization
Work styles

Recruitment
CareerLearning

Wellness

Responses as to whether the statement, “the Company
cares about employeesʼ health,” applies to Hokkoku FHD(January 2023 internal survey)

23.3％

50.9％

21.1％

Positive responses: 74.2%
Applies well

Applies somewhat

Does not apply much

Does not apply at all

4.0％ 0.7％
Neither

Formulation of health andproductivity management declaration
We formulated the Hokkoku FHD health and productivity
management declaration, and have disclosed thecorrelation between health and productivity management
and our corporate philosophy, brand philosophy, and vision,as well as on the policies we pursue. The declaration ismeant to clearly demonstrate our stance and show ourcommitment toward health and productivity management,
both internally and externally. It serves as the foundationof our eﬀorts in health and productivity management.

Formulate health and productivity
management declaration

Spread of health andproductivity management

Hold health-related seminars

Improvement of mental
and physical health

Focus on speciﬁed healthguidance

Establishment of a wellness
support teamSpecialists including public health nurses, nutritionists,
mental health workers, and industrial counselors are
regularly stationed at the Company. Gathering these
specialists, we have established the wellness support
team, which collaborates with the Human Resource
Development Department, and our health insurance
association and employeesʼ union. The team holds regularmeetings on employee health and drives the PDCA cycle
to promote health and productivity management.
The team also works closely with industrial physicians
and commissioned mental health doctors. The
collaboration allows it to provide more specialized support
for the mental and physical health of our employees,
even in a work environment that is becoming increasingly
diverse and complex.

VisionTo contribute to improving the regionʼs quality as anext-generation integrated regional company by operating
businesses in a wide variety of ﬁelds and from acustomer-centric perspective
Action policy
1. Provide active support for the maintenance andpromotion of good health
We will commit to the achievement of health and productivity
management and drive forward the maintenance and further
improvement of employee health through collaboration withthe health insurance association and employeesʼ union.
2. Create a comfortable work environment
We will strive to create a work environment that is rewarding
both professionally and personally, by helping employees
achieve a harmonious work-life balance.
3. Promote awareness of health and productivity management
We will spread the signiﬁcance of health and productivity
management among our employees and implement various initiatives
to support them in their eﬀorts to be physically and mentally healthy.

（7）

Focus on specialized health guidance
We focus on providing our employees with specialized
health guidance through our in-house public health nurses
and nutritionists. Through this guidance, we seek topromote daily health awareness and prevent ouremployees from serious illnesses by encouraging themto improve their lifestyles. We signiﬁcantly raised theratio of completed guidance by ensuring ﬂexibility interms of time and location through online sessions,among other means.
Ratio of speciﬁed health guidancecompleted
71.8％

71.3％

37.8％

Hokkoku FHDʼs health and productivity
management declaration
Hokkoku FHD hereby declares that it will promote health andproductivity management under the belief that employee healthis the key driver of actions to enrich the lives of individuals andthe society at large, as per the corporate philosophy of “trust̶abridge to a fruitful regional future.”

02

Human resources withhigh health literacy

Establish a wellness
support team

01

FY2020

85.0％

90.0％

Initiatives for Human Capital-Oriented Management

Hokkoku FHD views the health of its employees from amanagement perspective. By investing in employee health,it seeks to maximize the organizationʼs performance,
improve the regionʼs quality, and ultimately accomplish asustainable society. To this end, the Company promotes
health and productivity management.
The achievement of health and productivity management
leads to improved corporate value, starting with the good
health of our employees. It is one of our priority measurestied to our business strategy.
As such, health and productivity management is includedin the discussion agenda for the Board of Directors andother management-level meeting bodies to clearly establish
the involvement of our management. At the same time, we
focus on initiatives that encourage employee participation,
including the walk campaign held regularly.
Our group-wide approach has resulted in the sharing ofhealth and productivity management philosophy within theorganization. Initiatives in this area are viewed as a growthstrategy to achieve the Companyʼs goals beyond simply
protecting the health of its employees.

Humanresource
ecosystem

Share philosophy on health andproductivity management

Human resources who cancontribute to improving
the regionʼs quality

S t ra tegy

Sharing of health and productivity
management philosophy

Delivering
talentWellness

St o ry

Human resources who can contribute toimproving the regionʼs quality

For our employees to perform to the best of their abilities as people serving
the region, they must be healthy in both mind and body. To achieve this, theCompany, including the management team, the Hokkoku FHD Health
Insurance Association, and the Hokkoku FHD Employeesʼ Union have beenworking together closely to spread awareness on the importance of good
health, encourage work-life balance, prevent illness, and improve theCompanyʼs work environment. In the spring of 2023, we bolstered the staﬃng
of specialists and created a wellness support team to accelerate our eﬀorts
toward ensuring the mental and physical health of our employees.
We intend to ultimately upgrade our health-related initiatives into activities that
promote good health for the entire region. We will improve health literacy in theregion and achieve evolution in the maintenance and promotion of good health.

Story of

43.9％

FY2021

Completion ratio at Hokkoku FHD

FY2022(estimate)

FY2023(target)Average completion ratio for company-managed health insurance associations

Oﬀering health seminars
To encourage our employees to proactively engage inhealth and productivity management, we plan healthseminars regularly hosted by our health insurance
association and employeesʼ union. In FY2022, 11 seminars
were held, covering various themes from periodontal
diseases and lifestyle diseases to stress management.
In recent years, we have used IT tools to conduct online
seminars, which are also archived for later viewing. As
this system allows our
employees to take theseminars regardless ofplace or time, it has
signiﬁcantly contributed
to raising employee
health literacy.

A base for humancapital-oriented management
Health and productivity management can be viewed as
the foundation of our human capital-oriented managementin the sense that it seeks to fulﬁll our corporate andbrand philosophies through the betterment of employee
health. In recent years, our philosophy, framework, andinitiatives for health and productivity management havegained positive recognition, and for two consecutive years,
we were certiﬁed as a White 500 company*, which is anupper-level certiﬁcation of the Health & Productivity
Management Outstanding Organizations Recognition Program＊Hokkoku Bank was certiﬁed in 2022 and Hokkoku FHD was certiﬁed in 2023

91

｜(7) Initiatives for Human Capital-Oriented Management｜｜Work styles

Quality Company, Good Company.

Ratio of childcare leave taken and number of
employees using the reduced-working-hours system

(%)
100.0

97.7

100

98

100

80.0
60.0
40.0
20.0
0.0

30

14
0.0

4.3

FY2018FY20195423.1
FY202065100 (People)
120
93.9
97

80
60
40

19.4
FY2021

100

20
FY20220＊Data through FY2019 reﬂect those who chose to reduce their working
hours at the time their childcare leave ended.

Employees using the reduced-working-hours system

Childcare leave taken (female)Childcare leave taken (male)Contribution to child-rearing in the region
In March 2023, we introduced a childcare leave program for
grandparents (dubbed the “grandpa and grandma” childcare
leave), expanding the scope of our child-rearing support toinclude both parents and grandparents. This initiative
allows us to support the child-rearing generation within andoutside the Company, and contribute to the child-rearing
eﬀorts of the local community. The sense of fulﬁllment
gained through child-rearing also has a positive impact on
employee motivation and engagement. Since its introductionin March 2023, seven employees have already used theprogram, and we have received positive feedback, withboth employees and their families expressing their delight.

92

Organization

Work styles

Human
resource
ecosystem

Wellness

Recruitment
CareerToshiyuki and
Keiko Takenaka

Personal Banking Department,
Hokkoku Bank

The atmosphere in the Company toward taking
childcare leave has improved dramatically compared
to when we were of child-rearing age. We had hopedthat proactively using the program would promote its
uptake in the Company, so with the encouragementfrom our oﬃce, we decided to take the leave together.
While we gave our grandchild milk and changed
diapers, our daughter was able to rest or go shopping,etc., so her burden was alleviated. We also enjoyed
the time together with our grandchild as it broughtback memories of the days when we were busy taking
care of our twins. The program was well received byour daughter who said she was able to rely on us
without any hesitation thanks to the system.

Expansion of the reducedworking-hours system andthe leave-of- absence system
At Hokkoku FHD, we seek to create an environment thatis easy to work in by providing work styles unrestrictedby time or location. In March 2023, we bolstered oursystems for reduced work hours, leave of absence, andlong-term-care leave (beyond what is required by law)
to make them more useful. Thanks to this initiative, wewere able to provide work styles suited to each employeeʼs
approach, create time for learning and experience within
and outside the Company, and promote the conversionof part-timers to full-time employees.

Expanded options for the reduced-working-hours system(employees can now select the length of work hours
between ﬁve to seven hours per day in 30-minuteincrements)
Established a leave-of-absence system and areduced-working-hours system that do not require a
speciﬁc reason
Extended the period during which long-term-care leave
can be taken (one year ⇒ two years)
Established the “grandpa and grandma” childcare leave

An environment that iseasy to work in

Bolster the reduced-working-hours
system and the leave-of-absence
system02

Improve employee
engagement
Work style not restrictedby time or place

Promote teleworking

Learning

Utilized “grandpa and grandma”
childcare leave together
as grandparents

Systemic changes made in March 2023

Contribute to child-rearing
in the region（7）

Toward a more comfortable work
environment

A comfortable work environment
improves engagement

For many years, we implemented corporate culture
reforms and pressed on with industry-leading IT
investments and digitalization to ensure a better work
environment for our employees. As a result, in FY2022,
the average monthly overtime declined to two hours and
37 minutes, and the ratio of paid vacations taken reached91.5%, marking a new record high.

The establishment of a comfortable work environment,
not restricted by time or location, improves employee
engagement.
Since January 2022, we have implemented the eNPS
survey to assess employee engagement. In anothersurvey conducted together with the eNPS survey, we
also inquire about the work environment. To the question,“Are you able to secure private time and receive support
from others?” 67.3% of our employees gave positive
responses in the January 2023 survey. This indicatesthat our employees appreciate their current situation toa certain extent.
In the January 2023 survey, we also added the question,“Does the Company provide ease of working andsatisfaction?” to which 58.6% of our employees gave
positive responses. This showed that we still neededsome work in this area. Accordingly, we will continue towork toward ensuring further ﬂexibility of work styles
to improve employee engagement.

Overtime hours and ratio of paid vacations taken(Hours)

3：00

60.9

77.7

72.3

2：17
FY2018

81.4

(%)
100.0
80.0
60.0

2：00
1：00

91.5

3：05

2：57

FY2019FY2020Overtime hours

3：28

FY2021

2：37

FY2022

40.0
20.0
0.0

Ratio of paid vacations taken

Promotion of teleworking
Teleworking and other ﬂexible work styles have taken rootat the Company. We have introduced hotdesking at our
main oﬃce and our people also conduct online businessnegotiations and meetings actively. Our systems
development company Digital Value has adopted fully
remote working as a basic policy, and its engineers living
across Japan and even overseas are thriving at work.

(%)
100.0

Initiatives for Human Capital-Oriented Management

We understand that low male participation in childcare is asocial issue. Rather than having women take on the full
responsibility, we encourage both spouses to take an activerole in parenting. We believe that active male involvement inhousehold chores and childcare within the family leads togood family relationships and also raises motivation at work.
We began actively encouraging our male employees to takechildcare leave from around 2020. In March 2022, we expanded
the special paid vacation period from the previous ﬁve days to
10. To promote uptake, the general manager of the Human
Resource Development Department has been taking the lead in
explaining the program details, including how to take the leave.
These eﬀorts are steadily bearing fruit, and thepercentage of men taking childcare leave rose to 93.9%
in FY2022. We will continue to promote male participationin childcare, which remains a social issue.

Delivering
talentPromote uptake of childcare
leave by male employees01
S t ra tegy

Promoting uptake of childcare
leave by male employees

Human resources who can contribute toimproving the regionʼs quality

Human resources who cancontribute to improving
the regionʼs quality

St o ry

To be able to work without time and location constraints̶this is a common wish
among all our employees. At Hokkoku FHD, we utilize communication tools suchas Microsoft Teams and groupware to achieve a paperless work environment
with improved information transparency, laying the groundwork for work styles
not constrained by time or location. We also believe that a comfortable workplaceleads to an improvement in operational productivity and employee engagement.
Accordingly, we listen to feedback from our employees and polish our in-housesystems on an ongoing basis to oﬀer more ﬂexible and diverse work styles.
In March 2023, we established a childcare leave program for grandparents(dubbed the “grandpa and grandma” childcare leave). This marked the startof an initiative to support the child-rearing eﬀorts of the overall region
through our employees by encouraging parents and grandparents to take partin raising children.

Story of Work styles

Responses indicating “Being able to secure
personal time and receive support from others”

80.0

61.7

60.0
40.0

60.2

67.3

58.6
January 2022

July 2022

January 2023

“Ease of working and job satisfaction”

Working fully remotely from Malaysia

Miho Asao Technology Department, Digital Value, Ltd.
As a full-stack engineer at Digital Value, I design and develop business systems for Hokkoku Bank.
At the timing of my daughterʼs enrolment in junior high school, we moved to Malaysia for her
education. Although I now work fully remotely, I work in much the same way as I used to in Japan,
without feeling any inconvenience communicating with other members, as I can easily report progressand share information with the team. I am learning English now and my daughter is gaining diverse
experience. I am very grateful for the work environment that allows me to work fully remotely fromoverseas.

93

｜(7) Initiatives for Human Capital-Oriented Management｜｜Organization

Quality Company, Good Company.

Providing space to discuss openly using
Microsoft Teams▶Message from the president
Space where the president personally shares with all
employees the Companyʼs direction and approach▶Management meetings accessible to all (excluding
insider information)
All employees can participate in and speak freely at
the weekly management meeting

Organization
Work styles

Human
resource
ecosystem

Wellness

Frank discussions
We believe that a ﬂat and psychologically secure work
environment serves as the underpinning of innovation.
We have thus far implemented various measures aimed
at transforming the corporate culture and employee
mindsets. These included the elimination of quantitative
sales targets (sales quotas) and enhancement of thephysical environment (open workplace) beginning withthe relocation of our main oﬃce.
Through these measures, we have created an open
environment that emphasizes dialogue and accepts
various opinions and comments, and a non-hierarchical
workplace that ensures psychological safety andprovides space for lively discussions.
Our employees engage in cross-departmental discussions
on various measures and projects, and speak freely andopenly using Microsoft Teams that is accessible to all.
In the in-house survey conducted in January 2023,
76.2% of our employees responded positively to thestatement, “Leaders and members listen carefully to myopinions and ideas.” This indicated that many of ouremployees considered our workplace organizationallyﬂat and psychologically secure, which suggests that theenvironment is serving as a source of innovation.

In an in-house survey conducted together with theemployee engagement survey, more than half of theemployees responded that the Company shared important
information with them in a reliable manner. This showsthat we are being able to share information openly.
Ratio of those who responded that the Company
shared important information
(％)
60.0

55.0

50.0

94

54.3

January 2022

55.4

July 2022

58.0

January 2023

In March 2023, we established our human rights policy
to promote a deeper understanding of diversity and tocreate an environment where everyone is respected. Byclearly deﬁning our approach to human rights, we hope
to foster respect for human rights in our peopleʼs minds,
and demonstrate leadership in achieving a regionalsociety that respects human rights.
Particularly with regard to LGBTQ awareness, in May
2023, we conducted video viewing and discussion
sessions targeting all workplaces and employees topromote deeper understanding.
Additionally, we have always been working on
compliance with keen awareness. Here, we regularly
conduct training and comprehension tests targeting all
workplaces and employees.
We believe that respect for human rights and strict
compliance are prerequisites for our business activities.
To maintain a high level of awareness, we will continue to
conduct training and discussions involving all employees.

Improve employee
performance

Establish a role-based
wage structure

CareerHuman rights policy and LGBTQ

Online participation in a management meeting

Discuss freely

Recruitment

Learning

Flat organization andworkplace that ensures
psychological security

Raise employee
motivation

Conduct eNPS
Introduce restricted stock(RS) plan for employees（7）

Revitalizing the organization andexpanding proﬁtability
We are accelerating our eﬀorts to convert part-timers
into full-time employees.
We have helped expand the ﬁelds in which motivatedpart-timers can thrive by improving their terms of
employment. We also revisited the working hours, which
had been a hurdle for converting part-timers into full-time
employees, and provided more options so that people
could work more ﬂexibly in a way that suited theirlifestyles. As of March 2023, the ratio of full-time
employees had risen to 88%, revitalizing the organization.
Number of part-timers and ratio of full-time employees(People)
2,000

1,792

1,767

1,741

1,890

1,880

Number of part-timers
and ratio of full-time
employees
88

1,500

86

1,000

500

0

79

80

472

439

(%)
100

90

81
80

405

306

251

March 2019 March 2020 March 2021 March 2022 March 2023
Number of part-timers

70

Number of full-time employees

Ratio of full-time employees

We place emphasis on ordinary proﬁt and proﬁt per
employee or oﬃcer* as indicators of the state of oureconomic engine. The distribution amount of our newly
launched restricted stock plan for all employees is also
determined based on ROE. Each individual will continue
to strive in their work going forward, being mindful of
proﬁtability and productivity.
＊Employees and oﬃcers include directors (excluding outside directors),
executive oﬃcers, employees, and part-timers.

Ordinary proﬁt and proﬁt per employee or oﬃcer(￥ mn)
10
50

FY2021

8.6

Transition from wages based onseniority by length of service to
one that is based on roles
In conjunction with the introduction of a career-based
personnel system, we revised our wage structure and themethod of determining wages. From January to June 2023,
we engaged in company-wide dialogues on wage
determination for the ﬁrst time in the Companyʼs history.
Although there was some confusion as it was the ﬁrst time
we took on this challenge, through continuous dialogue, wewere able to revise the wage structure from one based onseniority by length of service to a more satisfactory structurethat focused on job roles and degree of contribution to theorganization. We held company-wide dialogues (meetings)
39 times with 1,490 participants in total.
The graphs below illustrate the wage levels before andafter the revision, by job roles. The vertical axis represents
annual compensation and the horizontal axis represents
age. The length-of-service-based seniority model shows
the plotting points steadily rising in line with age, but therevised model shows that annual compensations are being
determined regardless of age. The results of the wage
revisions were delivered to all employees in a one-on-one
setting to ensure better understanding.
Image of the wage structure transition before and after changeManagement positions (Corporate Consulting Dept./ Planning Dept.)(¥ mn)
10

5

Age 20 Age 25 Age 30 Age 35 Age 40 Age 45 Age 50 Age 55 Age 60
Annual compensation
Annual compensation
before change
after change(¥ mn)
10

Chief (Corporate Consulting Dept./ Planning Dept.)

FY20225

7.3
4.2

Ordinary proﬁt per
employee or oﬃcer

02
Initiatives for Human Capital-Oriented Management

We believe that our employeesʼ collective eﬀort to improve
the regionʼs quality is premised on correcting internal
information asymmetries and making information visible.
Hokkoku FHD utilizes Microsoft Teams, an online toolthat is accessible to all, to conduct discussions openly,
whether they are on strategic projects at individual
departments or deliberations at management meetings.
Ensuring information transparency leads to a common
understanding of the Companyʼs goals and strategic
directions, enables cross-departmental collaboration,and establishes a direct link between each employeeʼs
performance and the organizationʼs performance.

Delivering
talentPromote visualization of
information through use of Teams

01
S t ra tegy

Visualization of information
using Teams

Human resources who can contribute toimproving the regionʼs quality

Human resources who cancontribute to improving
the regionʼs quality

St o ry

We believe that an organization that can contribute to improving the regionʼsquality is one whose employees have a strong sense of ownership and arecapable of fulﬁlling their roles. We felt the need for a transformation thatinvolved everyone. Therefore, when we transitioned to a career-based personnel
system in March 2022, we made the bold move of having all employees leave
their respective companies at once to join Hokkoku FHD. In this way, we
drastically changed employee mindsets literally in a new company.
For our employees to fulﬁll their roles, we must ensure a ﬂat organizationthat provides psychological security. We are working to become a soundorganization by advancing information visualization and implementing
surveys to listen to the voices of our employees. We also seek to create anorganization that is open and free of discrimination by establishing a humanrights policy and conducting compliance training.

Story of Organization

4.0

Proﬁt peremployee or oﬃcer

Age 20 Age 25 Age 30 Age 35 Age 40 Age 45 Age 50 Age 55 Age 60
Annual compensation
Annual compensation
before change
after change95

｜(7) Initiatives for Human Capital-Oriented Management｜

Implementation of an employee
engagement survey (eNPS)

5.9

5.6
5.5

At the time of the eNPS survey, we also conduct a survey
on Hokkoku FHDʼs corporate culture. We believe bothsurveys have generated results portraying the Companyʼs
traits.

Alignment oforganizational andemployee goals

(%)

77.4

76.2

74.7

70.0

68.7

74.7

65.5

eNPS results

(%)

80.0
60.0

-20

-46.5％

-60

34.4％

34.4％

36.7％

6.6％

7.3％

8.4％

January 2022

July 2022

January 2023

I can relate to the
The Company is an
Companyʼs corporate organization that can change
philosophy.
ﬂexibly according to changes
in the market and environment.
July 2022

Leaders andmembers listen
carefully to myopinions and ideas.

January 2023

While the average recommendation score improved forour eNPS survey conducted in January 2023, the response
ratio fell. We are paying attention to this because theresponse ratio can be viewed as proof of trust andconﬁdence in the Company. We will continue to strive
for an organization that involves all employees by
reﬂecting in various measures the employee opinions
gathered through eNPS surveys.
Response ratio-40-69.8％-80-100

Promoters (recommendation score: 9, 10)
Neutrals (recommendation score: 7, 8)

(％)
85.0
80.0

82.9

Target response
ratio: 85.0%

79.1

75.0

74.2

70.0

Detractors (recommendation score: 0‒6)

＊Average eNPS of ﬁnancial/insurance-sector companies with 1,001 or
more employees

FY2023 estimate

94.7％ 95.6％

85.6％ 88.9％ 84.6％ 88.1％

40.0

Issues to be addressed going forward

80.0

FY2022 results

100.0

(%)

100.0

65.0

January 2022

July 2022

January 2023

July 2023

General staﬀ

ChiefsManagers

Wage gap by role and job level(Personal Consulting Dept.)

80.0
60.0

((eNPS)%)

40.0

96

＊Pay gap: Average annual compensation (female)/average annualcompensation (male)

81.6％ 84.4％

40.0
20.0

General staﬀ

74.4％ 76.8％ 75.0％ 81.2％
ChiefsManagers

Introduction of a restricted stock(RS) granting plan for all employees
As part of our beneﬁts package, in FY2022, we introduced
a restricted stock-granting plan for all employees.
The plan, which grants shares to employees forlong-term holding, is aimed at nurturing a sense ofownership among the employees, encouraging them toshare common values and the mission to improve theCompanyʼs corporate value with all stakeholders,
including the shareholders.
The amount to be granted to employees is determinedbased on ROE. In March 2023, when we made our ﬁrst
distribution, RS amounting to a total of approximately￥340 million was granted to 1,864 employees.
Through a proﬁt-sharing program for our employees,
we hope to raise their awareness toward contribution toteams and the organization and enhance employee
motivation and engagement.

Total amount of RS: Total number of RS:￥340,858,210

80,486

ROE

Proﬁt estimate

Amount of
RS granted

8% or higher¥18.0 billion or more

¥3.0 billion

7% or higher, but lower than 8%¥16.0‒18.0 billion¥2.2 billion

6% or higher, but lower than 7%¥13.5‒16.0 billion¥1.5 billion

5% or higher, but lower than 6%¥11.5‒13.5 billion¥0.7 billion

4% or higher, but lower than 5%¥9.0‒11.5 billion¥0.35 billion

3% or higher, but lower than 4%¥7.0‒9.0 billion¥0.35 billion

2% or higher, but lower than 3%¥5.0‒7.0 billion¥0.17 billion

1% or higher, but lower than 2%¥2.5‒5.0 billionーLower than 1%Less than ¥2.5 billionーLong-term
targetMedium-termtargetImproving the ﬁnancial strengthof employees through direct
investment in human resources
We believe that improving compensation is an importantmeasure to enhance employee motivation.
At the time we introduced the career-based personnel
system in March 2022, we raised the starting salary of
new graduate hires (from ¥205,000 to ¥264,000/month)and changed the retirement payment scheme to improvethe ﬁnancial treatment of our employees, particularly
our young workforce. In addition, in FY2022, we
adopted an RS granting plan for employees to enhancecompensation. In the medium to long term, we hope tosubstantially increase the amount of RS to be granted,
in line with our proﬁt level, and bring our average annualcompensation to the highest level in the industry by thetime our ROE reaches 8% or above.
As we strive to improve our employeesʼ ﬁnancial
conditions, ﬁnancial wellness also becomes important. We
encourage our people to expand their self-investment inrecurrent education and reskilling and develop a money
plan focusing on asset building from a young age. We willcontinue to help improve employee ﬁnancial wellness by
hosting asset management seminars, among other means.

(¥ mn)
10

5

0

01
02

Amount granted based on ROE

Pay gap by role and job level*(Corporate Consulting Dept./Planning and Operations Depts.)

78.5

77.7

January 2022

0

0.0

Flat
organization

20.0

100.0

20.0

Ability toaddress change

Granted to:

1,864 employees（7）
Initiatives for Human Capital-Oriented Management

Our organizational traits revealed throughsurveys0.0

Number of employees who responded:
1,764 (January 2022), 1,838 (July 2022),
1,634 (January 2023)-51.0％

January 2023

20.0

Survey scope:
All employees of the Group(including executive oﬃcers, local employees atbases, and business staﬀ, but overseas excluding
directors)-52.4％

July 2022

40.0

eNPS score calculation method :Promoters (%) − Detractors (%)

60.0

January 2022

60.0

＊eNPS SM is a service mark of Bain & Company, Fred Reichheld,
and Nice Systems, Inc.

(%)

5.8

5.7

80.0

How much would you want to recommend thatyour close friends and acquaintances work at yourcurrent workplace?
(= Recommendation score regarding workplace)(On an 11-point scale ranging from 0 to 10)

5.8

5.8

100.0

Question:

6.0

6.0

In our annual securities report for FY2022 (ended March
31, 2023), we disclosed that our gender pay gap was
57.5% when taking all of our workers into account. We
have been working to eliminate the gender pay gap, andone such initiative was the transition to a wage structure
based on roles and provided values, implemented in linewith the introduction of a career-based personnel system.
Looking at the gender pay gap by roles and job levels,
the diﬀerences are narrowing, particularly among
younger employees. The company-wide dialogue andwage determination conducted between January andJune 2023 have also helped narrow the pay gap in allroles and job levels.
The gender pay gap remains at Hokkoku FHD, partly
because it used to hire new graduates based on adual-track personnel system (management track andgeneral track). However, we believe we can bring the
gap down to zero by pressing on with our eﬀorts toestablish a wage structure based on roles and theprovided values.

S t ra tegy

＊From July 13 to August 9, 2022, EmotionTech, Inc. conducted an online
survey of 6,187 people who work for companies in 15 major industries
including ﬁnance and insurance.

6.1

RS granted in March 2023

St o ry

In January 2022, we adopted eNPS as a metric of
employee job satisfaction (ease of working andsatisfaction), and have conducted three eNPS surveys
to date. The results showed that both eNPS and average
recommendation scores have increased, suggestingthat we are maintaining a certain level of employee
engagement. Meanwhile, according to the 2022 eNPS
survey* conducted by EmotionTech, Inc., which supports
the improvement of employee experience using eNPS,
the average eNPS of ﬁnancial and insurance sector
companies with 1,001 or more employees was -69.8%.
Although a simple comparison cannot be made since
the survey method is diﬀerent from ours, it can be said
that the engagement of our employees is relatively high.
We will continue to conduct our survey regularly to hear
the voices of each employee and build an environment
where employees can work with a sense of fulﬁllment.

Improvement of gender pay gap

Average recommendation score

6.2

Average annual compensation*

6.8

Current

98Target 5 years on

Target 10 years on＊Annual compensation: Includes amount of RS granted97

｜(7) Initiatives for Human Capital-Oriented Management｜｜Delivering talent

Quality Company, Good Company.

Delivering
talentWork styles

Recruitment
CareerLearning

Wellness

As a company that is consistently working toward theregionʼs progress, we think of our company and also theregion at large when investing in human capital.
Providing consulting services to the local community
enhances the value of the region, and ultimately leads tothe accumulation of know-how at the Company. Thiscan be described as the sharing of expertise through thecirculation of expertise within the region. Likewise,delivering and exchanging human resources can beseen as the sharing of talent through the circulation of
resources within the region.
The sharing of expertise and talent goes hand in hand,and can be described as knowledge sharing with theregion.
This knowledge sharing can be accomplished byconsidering expertise and the Companyʼs humanresources as capital, investing in them, and returningthem to the region once they are bolstered. This
represents a true human capital investment in the region,
and we will continue to focus on it as an importantmeasure in our mission to improve the regionʼs quality.

Producing management talent
We have built a resource circulation model where our people
can directly apply the expertise and skills honed through theirexperiences at Hokkoku FHD in their management-levelroles at local companies, and thereby contribute toimproving the regionʼs quality from outside the Company.
This model is meaningful in that it creates regional value
using the Companyʼs human resources. At the same time, it
beneﬁts our employees, because they can enrich theircareers by continuing to be active outside the Company. It
also gives them the opportunity to reaﬃrm the importanceof recurrent education to “keep learning” regardless of age.

Exchange humanresources
Sharing
Accumulateof talentknow-howthrough
Deliver humanconsulting
resources
services

Provideconsulting
services tothe region

250

Corporations

Knowledge sharing with the region

Human resource exchange within the region
To promote digital transformation (DX) within the region, in April 2023, we began exchanging human resources with the
Ishikawa Prefecture and the city of Kanazawa. This initiative allows us to accelerate regional DX, which is one of ourgoals. Furthermore, having the resources we hosted take home and reapply the expertise they gained also leads to theenhancement of the regionʼs quality. As such, we are working on this initiative, viewing it as another way to deliver talent.

Local government → Secondment to Hokkoku FHD

Municipalities/partners

200

10

150

10

100

7

5
38

106

52

March 2023

159

10
182

March 2024 March 2026 March 2028 March 2030

We value the careers of each and every employee. As such,even when employees decide to leave the Company topursue endeavors elsewhere, we send them oﬀ withencouragement. For those who have made career changes,
we also have in place a point of contact for alumni
recruitment so that employees can take on various
challenges, including the option to leave the Company.
Reasons for leaving the Company(Number of employees who left in FY2022: 57)

Sharing of expertise

Hokkoku
FHD

Knowledge sharing
with the region

Human resource exchange
within the region

Number of employees taking on roles outside
the Company as management-level talent (plan)

Other means of delivering resources

Region(customers)

Share values withthe region

02

Other
Mandatory
retirement

12

11

3
Career change
31

Deployment to
the region as
management talent

73.7％

Approximately 70%
contribute to the region
in a ﬁeld diﬀerent from
Hokkoku FHD.

Mr. Tatsuya Miyamoto
Ishikawa Prefectural Oﬃce

Mr. Hiroyuki Togashi

Working at the Company, we have recognized the following about
Hokkoku FHD.
1. Flat corporate culture and the use of digital technology allow prompt
sharing of information. People can express their own ideas regardlessof their positions.
2. The Company abundantly invests in developing human resources andhas in place a system that supports the learning of many employees
who are highly motivated to improve their skills.
3. Employees appear to be working with an awareness of the need to workwith speed and precision.
4. The Company has established an environment where employees can pursue
solutions by interacting with each other and discussing matters openly.
The opportunity for employees of diﬀerent municipalities to work together
at a private company is in itself a great stimulus. The work experience at
Hokkoku FHD provides an opportunity to consider things from multiple
angles, so we hope to brush up this skill and learn to think from various
points of view without being bound by preconceptions.

Initiatives for Human Capital-Oriented Management

Delivering human resources tothe region0

Deliver human resources
to the region（7）

Human capital investment in
the region(People)Make human capital
investment in the region

01
S t ra tegy

Organization

50

98

Human
resource
ecosystem

Human resources who cancontribute to improving
the regionʼs quality

St o ry

Human resources who can contribute toimproving the regionʼs quality

For employees who have gained various experiences, knowledge, and skills
through the human resource ecosystem of Hokkoku FHD, we provide a career
stage where they can contribute to the improvement of our regionʼs quality by
becoming the top executives of local companies. Having our employees take on
active roles in local companies using their experiences at Hokkoku FHD is an
important way of providing value as they can directly contribute to improving
regional quality. The employees gain the opportunity to showcase themselves asa brand of their own and build a career outside the Company as management
talent. In addition to sending out our own employees, we also accept people frommunicipalities and other organizations, promoting two-way exchanges. Hokkoku
FHD is committed to humbly leading the region by sharing expertise and humanresources with the local community.

Story of Delivering talentKanazawa City Hall

Digital Department, Hokkoku Bank
(seconded from April 2023)

I use my private-sector expertise and assist the governor and vice governor (CDO)
in digital policies to resolve regional issues and improve public services.
My main job areas include (1) promoting digitalization of the prefectural oﬃce
(reform of employee work styles and awareness, etc.), (2) developing and utilizing
wide-area data linkage infrastructure (digital regional currency, etc.), and (3)supporting cities and towns within the prefecture (standardization of businesssystems, etc.).
I am making a great eﬀort and feeling great joy every day in utilizing the skills andperspectives I honed at Hokkoku FHD to contribute to the community from theposition of a public servant. I can make maximum use of the know-how andexpertise of the Hokkoku FHD Group by collaborating with relevant staﬀ at theCompany as necessary. This set-up is very reassuring and allows me to take onchallenges with peace of mind despite the new environment and job responsibilities.

Yoshiaki Kitajima General Planning Department, Hokkoku Bank

Assistant Executive Director of Ishikawa Prefecture (in charge of digital), Executive Advisor
for CDO (seconded from November 2022)

Hokkoku FHD → Secondment to local government99

｜(7) Initiatives for Human Capital-Oriented Management｜｜Story of personnel system reforms

0
2
0
2

0
1
0
2
000

2

Personnel
1.0
Personnel matters are
determined based on
managementʼ s intent
No documented rules andregulations

Management
Employees

100

Personnel
2.0
Written rules and regulations
are in place
A master‒servant relationshipbetween Company andemployees

Management

Organization

Employees

Personnel
3.0
An environment that iseasy to work in andemployee-friendly

3
2
0
2

2
2
0
2

1
2
0
2

Personnel
4.0
Relationship of equality
between employees andthe Company
In addition to being easy
to work in andemployee-friendly, theCompany is a partner thatoﬀers job satisfaction

Personnel
5.0
Shares common aspirations
and transcends theemployee‒Company
relationship
Progress in internal andexternal collaborations
creates new values

Company

Shared aspirations[January 2022] Introduced employee engagement survey (eNPS)[Mar. 2022] Began career reviews[Mar. 2022] Introduced career-based personnel system[Mar. 2022] First home-grown female executive oﬃcer[Apr. 2022] Shifted from a traditional new-hire welcoming ceremony
to welcome meetings[Aug. 2022] Published a book titled Brushing Up Human Resources
Energizes Companies and Local Communities[Oct. 2022] Formulated skill maps
[Nov. 2022] Began personnel exchange with local municipalities

02（7）
Initiatives for Human Capital-Oriented Management[2014] Relocation of head oﬃce. Internal cooperation enhanced due
to open-plan oﬃce layout[2015] Appointment of female directors[2015] Eliminated quantitative sales targets (sales quotas) andtransitioned to process-focused personnel evaluation[2016] Did away with general-track employment; all employees
became management-track employees[2016] Introduced ﬁnancial aid for self-development (support for
obtaining diﬃcult qualiﬁcations)[2017] Introduced ﬂexible working hours and staggered working hours[2018] Began discussions to update personnel system[2018] Introduced sophisticated online course training run by third party[2018] Formulated communication plan[2019] Introduced one-on-one interviews[2020] Introduced Microsoft Teams[2020] Began focusing on mid-career recruitment in earnest[2020] Began assisting employees to obtain MBA degrees[Jan.‒Jun. 2023] Transitioned to wages based on roles by engaging in dialogues away
(moving from seniority based on length of service)[Feb. 2023] Received Human Capital Leaders 2022 award[Mar. 2023] Expanded options for the reduced-working-hours system[Mar. 2023] Lifted ban on side jobs outside the Company[Mar. 2023] Certiﬁed as a White 500 company (large enterprise category) under the 2023
Certiﬁed Health & Productivity Management Outstanding Organizations
Recognition Program[Mar. 2023] Received the Minister of Regional Revitalization award at the 13th“Companies that Deserve to be Valued the Most in Japan” Awards[Mar. 2023] Formulated human rights policy[Mar. 2023] Introduced the “grandpa and grandma” childcare leave(childcare leave for employees who are grandparents)

Toward a group of
talent with truly
autonomous careerdevelopment

S t ra tegy

“Providing the place and opportunities in which everyone can feel fulﬁlment from work, and giving support so that people
can thrive.” This is the value that the Human Resource Development Department at Hokkoku FHD aims to provide. Since
the time of the predecessor unit, the Personnel Department of Hokkoku Bank, we have consistently created something
new by closely integrating the Companyʼs business strategy with our human resource development strategy. To date, thedepartment itself has also embraced change and continued to take on challenges.
The career-based personnel system introduced in March 2022 is an unprecedented system that focuses on the careerof each individual. However, it goes without saying that the introduction of a personnel system is not the end of theprocess. What is important is its operation. Hokkoku FHDʼs Human Resource Development Department will continue tomove forward as it aims to provide places and opportunities where employees sharing the same aspirations to improve
regional quality can feel satisfaction from working under the corporate culture of a ﬂat organization and agile thinking.

01
St o ry―From management to strategy, and autonomous career development―

Employees
Company

Company
Employees

An environment
easy to work in[2009] Introduced reduced-working-hours system[2010] Launched initiative to double productivity[2011] Modiﬁed personnel IT system (visualization of employee
information)[2012] Integrated Personnel Department into the Management
Planning Department (from management-centered HR
to strategic HR; Personnel Department reorganized into
the Personnel Development Oﬃce)[2012] Management operations moved to BPO Management,
Ltd.; Personnel Development Oﬃce started specializing
in strategic functions[2021] Became a stand-alone Human Resource Development Department and built HR
strategies for the entire Hokkoku FHD[2021] Beginning of Hokkoku FHD structure[2021] Introduced in-house-developed HRM system (visualization of career plans)[2021] Introduced the collaboration program (allowing side jobs within the Company)[2021] Partially delegated personnel transfer authority to individual departments(ﬂexible personnel exchange made possible)

101

03

Env i r onmen t&Gove r nance｜Environmental Initiatives｜Eﬀorts through business activities

1. Governance

Promotion of customersʼ climate change awareness through an understanding of
their business prospects

TCFD response team

General Planning Department
Management Administration Department
CC Innovation

Coordination
PR & IR Section,
General Planning
Department

Strategic
Committee

Board ofDirectors

2．Strategy

Risks and opportunities
Transition risks (assuming risks will become most apparent in the 1.5 ‒ 2ºC scenarios)
Policy andregulatory risks

Earnings decline and impairment of existing assets, etc. at borrowers and investees due to an increase in costs tocontrol carbon emissions
Increase in costs to address climate change-related regulations in Japan and overseas

Technologicalrisk

Earnings decline and impairment of existing assets, etc. at borrowers and investees due to failures and delays indeveloping decarbonization technologies

Market risk

Earnings decline and impairment of existing assets, etc. at borrowers and investees due to changes in the
supply‒demand environment of their products and services

Reputationalrisk

Deteriorating reputation and corporate brand due to delayed responses
Worsening evaluation by outside parties due to lack of information disclosure
Deteriorating reputation due to continued transactions with business partners whose responses to climate change are insufficientE

Environment

S

Social and regional
contributions
Human rights andlabor issues
Products and services,
organizational structure

S, G
S, G

Acute risk

Chronic risk

Higher facility and energy costs accompanying efforts to strengthen business continuity

Reduced operation costs due to efforts to improve operational efficiency, such as going paperless
Achievement of highly efficient energy use due to the introduction of energy-saving facilities
Efficient operation of owned facilities

Energy source

Lower procurement costs due to a shift in energy sources

Products andservices

Expanded financing and leasing opportunities fueled by rising needs for capital investment in renewables and decarbonization
Expanded opportunities for consulting work related to decarbonization
Expanded consulting opportunities to address increasing needs for operational efficiencies, such as going paperless
Expanded consulting opportunities to address increasing needs for formulating management strategies to transform businesses

MarketImproved corporate image through promotion of climate-related information disclosure

Resilience

104

Expanded financing opportunities fueled by infrastructure investment, etc. to ensure disaster preparedness
Expanded consulting opportunities to address increasing needs for business continuity planning as part of disaster preparedness

No initiatives taken,
not aware of the issue

Number of
sub-items

2

1

0

11

2

1

0

5

2

1

0

12

2

1

0

18

Consulting and advisory

In our priority businesses of consulting and advisory, we have included ESG and SDGs consulting in theservice lineup to support the sustainable business management of our customers.
Responding to climate change is an important and urgent issue for companies. We believe that, much
like digital transformation (DX), green transformation (GX) is a necessary element for customersʼ
accomplishment of their visions.
By understanding their business prospects, we will share our customersʼ challenges and support them intheir transformation.

Scenario analyses

03◉Flow chart for calculating transition risks(1)Determine sectors forwhich transition risks arecalculated(2)Prepare draft assessmentof climate change risks
and opportunities(3)Set parameters(4)Define scenario groups(5)Make qualitative
assessment of the business
impact(6)Make quantitative
assessment of transition
risks

Transitionrisks

We analyzed the impact the transition to a carbon-free society would have on the sectors of “metals andmining,” “food products,” and “land transport, railway, air cargo, and logistics services.” These sectors werechosen for the following reasons:(1) Likely to be vulnerable to the impact of climate change(2) Present a large impact on the Companyʼs financials due to their credit balance(3) The Company can contribute to improving awareness of decarbonization in the region due to the large
number of customer debtors in these sectors
The analyses of each sectorʼs top 10 companies by the amount of credit granted (30 companies in total)
indicated that our credit costs will increase by roughly ￥3.2 billion by 2030.

Physicalrisks

Using the IPCC 4ºC and 2ºC scenarios as reference, we analyzed the impact of the deterioration of customersʼ
business conditions, and the impairment of customer offices and collaterals and of our own properties in theprefecture, should a once-in-a-century wind and flood damage occur in Ishikawa Prefecture.
We conducted an analysis covering debtors with business bases within the Ishikawa Prefecture, in areas
susceptible to flooding depths of 0.5 meters or more, for a period through 2050. The results showed that ourcredit costs would increase by roughly ￥4.7 billion at most under the 4ºC scenario and ￥2.4 billion at mostunder the 2ºC scenario.
The impact on the Company-owned properties was estimated at ￥200 million at most under the 4ºC scenarioand ￥100 million at most under the 2ºC scenario.

Opportunities
Resource
efficiency

Began
initiatives

Customers with whom we were able to conduct hearings on environmental issues (among all ESG/SDG
items) in conjunction with our efforts to understand their business prospects:
3,506 companies (50.1%) of the relevant pool of 6,999 companies as of the end of March 2023

Physical risks (assuming risks will become most apparent in the 4ºC scenario, etc.)
Risk of becoming unable to continue operations due to damage to sales bases and other property holdings; risk of
cost increases related to countermeasures and restoration work
Increase in credit costs accompanying deteriorating performance and collateral impairment at borrowers andinvestees due to natural disasters
Fluctuating value of securities and other holdings owing to worsening market and investment environment as well as
declining credibility of borrowers and investees due to climate-related disasters

Initiatives
disclosed

Environmental Initiatives

We have recognized the major physical and transition risks and opportunities associated with climate change and set
forth policies to address them.
In terms of scenario analyses, we have calculated the transition risks for three industries that are likely to have asubstantial impact on the Company and the customers in the region. For physical risks, we have referred to the 4ºC
and 2ºC scenarios and analyzed the potential impact of worsening customer business conditions and impairment ofcollateral value in the event of a large flood in Ishikawa Prefecture due to climate change.
Based on the results of these analyses, we will engage in dialogue with our customers and promote awareness ofdecarbonization in the region while generating business opportunities through consulting and other services.

Assessment at the principal item level02

E nv i ronmen t & Gove rnance

TCFD governance system

We are working to enhance awareness of climate change responses among our customers through our efforts
to understand their business prospects. We will address customersʼ decarbonization-related financing needs,
including loans and leases. At the same time, we will create business opportunities in consulting and advisory
by working together with the customers on climate change responses and other ESG-related challenges.

S t ra tegy

In accordance with Hokkoku FHD Environmental Policies, the Board of Directors receives reports and oversees issues
concerning climate change.
While we do not have a committee dedicated to climate change issues, we have in place a system to identify anddiscuss climate change and other sustainability issues in the form of cross-departmental projects led by the General
Planning Department (PR & IR Section), which includes the Management Administration Department and ourconsulting subsidiary, The CC Innovation, Ltd.
Our policies and other important matters concerning climate change are discussed at the Strategic Committee
meetings attended by the president and other executive oﬃcers as well as general managers of the businessdepartments, and are then resolved at Board of Directors meetings.

01
St o ry

Responses to TCFD recommendations

105

｜Environmental Initiatives｜

3．Risk management

Action plan

Investment and loan policy＊ZEB: Short for net zero energy buildings; environmentally friendly offices

Businesses for which
we prohibit investments
and loans

Antisocial forces and businesses
Businesses that engage in child labor and/or forced labor
Businesses that develop and/or manufacture nuclear, chemical, or other weapons ofmass destruction, or inhumane weapons such as cluster munitions

Specified sectors

Coal-fired power generation sector, cluster munitions manufacturing sector, forestry
sector, and palm oil plantation development sector

Sector policy
In light of our efforts concerning climate change risks, environmental protection, andrenewable energy, we carefully consider investments and loans for coal-fired power
generation businesses on a project-by-project basis.

Cluster munitions
manufacturing-related
business

In light of the inhumane nature of cluster munitions, we prohibit investments and loans tocompanies that manufacture cluster munitions.

Deforestation business

Regarding investments and loans to large-scale deforestation projects, we carefully consider
our approach, factoring in the status of customersʼ consideration of the environment andlocal community and the actual impact on the environment and community.

Palm oil plantation
development business

From the viewpoint of preserving forest resources and biodiversity and protecting humanrights, we prohibit investments and loans to palm oil plantation development projects.

Reduce vehicles for business use and replace current vehicles with EVs (HVs)
Switch to carbon-neutral electricity*＊Carbon-neutral electricity: Electricity that achieves net zero CO₂ emissions through the use of renewable energy andcertificates of environmental value (non-fossil fuel certificates)

Initiatives contributing to CO₂ reduction in society at large
BPR and ICT consulting
Promoting cashless payment
Promoting the use of cloud-based internet banking for individual customers and internet banking for corporate customers
By continuing the customer-oriented efforts shown above, among other initiatives, we seek to improve productivity,
reduce CO₂ emissions, and spread awareness in the region.

Environmental responses at new oﬃces (Komatsu and Kaga sales departments)
The offices of our Komatsu and Kaga sales departments have beencertified as Nearly ZEB buildings for their facilities that reduce energy
consumption and the photovoltaic panels that generate energy.

Characteristics

4. Indicators and targets

We disclose data on Scope 1 and Scope 2 greenhouse gas emissions, and designate the results in CO₂ emissions
reduction as our climate change-related indicator. In FY2030, we target 100% emissions reduction versus FY2013.

Target

FY2030 CO₂ emissions reduction target of -100% from FY2013
Results (tons)

Use of high-performance insulation materials
Adoption of heat-insulating glass in building openings to shield heat in
the summer and prevent internal heat from dissipating in the winter
Reduced energy consumption through full installation of LED lighting andintroduction of daylight and motion sensors
Adoption of a slit system for ventilation to take in outside air
Introduction of a system to visualize energy volumes, including power
consumption and generation

7,808

7,734

100%

EnergysavingGenerate

Energygeneration

Energyused
in ZEBs

Energygenerated
by ZEBs

25% or less

Source: Ministry of the Environment website

Versus FY2013 level

7,489
6,455

6,148

6,303

5,569

5,245
Komatsu Sales Department (Opened in August 2022)

FY2014

Energy necessary
for conventionalbuildings

Reduce48.3% reduction

10,191FY2013

Nearly ZEB

03

Environmental Initiatives

Coal-fired power
generation business02

Convert existing office facilities to energy-saving facilities and install
photovoltaic systems on office rooftops

E nv i ronmen t & Gove rnance

Customersʼ environmental, social, and governance-related initiatives and businesses

S t ra tegy

Businesses we support
actively

8,634

01

Adopt ZEB* concept when building new offices
Convert existing office facilities to energy-saving facilities

St o ry

We have established our investment and loan policy and sector policy in accordance with our sustainability policy andmateriality. As such, we seek to reduce and avoid investments and loans that are highly likely to have an adverse
environmental and social impact.

FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022Kaga Sales Department (Opened in May 2023)

Endorsement of international initiatives

CO₂ emissions (absolute value) are stated by adding emissions from business-use vehicles to the CO₂ emissions figures
presented by Hokkoku Bank in its periodical reports under the Act on the Rational Use of Energy. (We disclose data on
Scope 1 and Scope 2 emissions.)
In the future, we will consider tracking and disclosure of other climate change-related metrics.

106

107

｜Corporate Governance｜

Transitions in the corporate governance system

Basic approach to corporate governance

2006

2007

2008

2009

2010

2011

Separation ofIntroduced an executive oﬃcer systemmanagement andexecution functions

Overview of the current system

Evaluation ofBoard of Directors
eﬀectiveness

2017

2018

2019

2020

Transitioned to a company with
an Audit and Supervisory Committee
4 directors (26%)

Outside directors

2021

2023

Transition to a holding
company structure

5 directors (29%)

5 directors (55%)

Eliminated retirement beneﬁts
Introduced performance-linked compensation and stock options
Made corporate auditor compensation not linked to performance

Eliminated stock
options and introduced
a board beneﬁt trust

Introduced performance-linked
monetary compensation andperformance-linked stockcompensation (restricted stock)

Hokkoku Bank

Delegation of a portion of businessexecution decision-making to directors
Conduct constructive discussions on
management strategy at the Board of
Directors meetings
Board ofDirectors
Directors(business execution)
3 directors

Audit and Supervisory
Committee members
Audit /
supervise

Discuss director
appointment

6 directors(of which, 5outside directors)

Direct andorder

Audit Department

Hokkoku FHD

Board of Directors and the directors
Outside directors: 55%

5 outside
directors(2 femaledirectors)

9 directors

4 inside
directors

Term ofoﬃce

1 yearChairperson

President

Audit and Supervisory Committee and its members
Outside Audit and Supervisory
Committee members: 83%
5 outside
directors(2 femaledirectors)

6 Audit andSupervisory
Committee
members

1 inside
member

01
02

Introduced a system to evaluate
Board of Directors eﬀectiveness

Executivecompensation

Discusscompensation

2022

Established a discretionary Nomination
and Compensation Committee

Committee

Discretionary Nomination
and Compensation
Committee

Corporate governance system

2016

Term ofoﬃce

2 years
One of the outside
directors (appointed

Chairperson by resolution of the

Audit and Supervisory
Committee)

Nomination and Compensation Committee

03

Corporate Governance

We use the communication tool Microsoft Teams to share all information with our oﬃcers and employees, except forsensitive information, such as important facts that inﬂuence investorsʼ decisions. By doing so, we seek to eliminate
information asymmetries and create a transparent and ﬂat organization. Furthermore, the agenda and materials formeetings of the Group Strategic Committee, which comprises the oﬃcers of Hokkoku FHD and Group companies, aredistributed via the communication tool in advance to ensure active discussions and prompt decision-making on the day ofthe meetings. The proceedings of these meetings are streamed live for viewing by all oﬃcers and employees. In this way,
we seek to spread our initiatives throughout the organization and ensure transparency in the decision-making process.

2015

E nv i ronmen t & Gove rnance

Key initiatives for improving corporate governance2014

S t ra tegy

Hokkoku FHD has adopted the organizational structure of a company with an Audit & Supervisory Committee to bolster
the corporate governance system and further improve its corporate value. The directors serving as Audit & Supervisory
Committee members (including multiple outside directors) are granted voting rights at the Board of Directors meetings.
This enhances the Committeeʼs audit and supervisory functions over the Board of Directors and those with executive
responsibilities. At the same time, by having outside directors participate in management, we seek to improve thetransparency and eﬃciency of the decision-making and business execution processes, and thereby further enhance
governance.
Currently, ﬁve out of our nine directors are outside directors (ratio of 55.5%). All ﬁve outside directors are independent
outside directors who provide opinions as well as audit and supervise the directors from an objective and neutral
standpoint.
In addition, by establishing the discretionary Nomination and Compensation Committee (chaired by the president andCEO), we have put in place a structure that ensures transparency and objectivity in the selection of director candidates
and the process of determining director compensation.

2013

St o ry

To fulﬁll our corporate philosophy and achieve the visions and targets set forth in the medium- to long-term businessstrategy, at Hokkoku FHD Group, we believe it is important to maintain a harmonious relationship with the shareholders
and other stakeholders while thoroughly committing to the improvement of business transparency and strict adherence
to compliance matters. To promote a broader understanding of the Groupʼs corporate governance initiatives, we willproactively engage in IR activities, strive to disclose information through our website and integrated report in aneasier-to-understand manner, and become a company that is highly transparent and open both internally and externally.

2012

Outside directors: 55%

5 outside
directors(2 femaledirectors)

Chairperson

9 directors

President

4 inside
directors

General Meeting of Shareholders
Appoint / dismiss

Main agenda items of the Board of Director meetings in FY2022

Appoint / dismiss

Audit and Supervisory
Audit / supervise
Committee

Consult

Board of Directors

AdviceInternal reporting system

Group Strategic Committee

Audit Department

Nomination andCompensation Committee

Internal audit system■ Group capital strategy

The Board discussed the capital strategy of the Group as a whole, including policy on shareholder returns.

■ Policy on strategic shareholdings and revision of reporting and veriﬁcation process

The Board veriﬁed the status of share reduction and holdings based on the Companyʼs shareholding policy.

■ Updates to the medium- to long-term business strategy

The Board discussed the revision details of the medium- to long-term business strategy, which is updated annually.

■ Business strategies of Group companies

General Planning
Department

Human Resource
Development Department

Management Administration
Department

Hokkoku Financial Holdings, Inc.
InstructManageDiscuss
ReportConsolidated subsidiaries

108

The Board discussed the business model, as well as future business strategy and proﬁt and loss projection for each company.

■ Establishment of ESG materiality, investment and loan policy, and sustainability policy

The Board discussed the details on materiality issues, sustainability, and environmental policies, and the endorsement
and responses to TCFD recommendations.

■ Structure of the Audit and Supervisory Committee and audit plan

The Audit and Supervisory Committee explained its structure and reported its audit plan.
For details concerning corporate governance, please refer to our Corporate Governance
Reports. (Japanese only) https://www.hfhd.co.jp/governance/pdf/20230613.pdf

109

｜Corporate Governance｜

Board of Directors meetings, committee meetings, and the audit system

Board of Directors ▶ Number of meetings held (FY2022): 11

Nomination and Compensation Committee ▶ Number of meetings held (FY2022): 4

Hold discussions
based on the resultsof the questionnaire
surveyShare results anddetails ofeﬀectivenessevaluation

Operate the Board
taking heed of theissues identiﬁed

Overview of evaluation resultsGroup Strategic Committee ▶ Number of meetings held (FY2022): 48

The results of the evaluation based on the questionnaire survey and subsequent discussions showed that theeﬀectiveness of the Board of Directors has been suﬃciently maintained for the following reasons:Audit and Supervisory Committee ▶ Number of meetings held (FY2022): 11
In principle, Audit and Supervisory Committee meetings are held once a month, and extraordinary meetings are held asnecessary. The committee audits directorsʼ execution of duties, creates audit reports, and also determines its opinions
on director appointment, compensation, and other items.

Audit by the Audit and Supervisory Committee
In accordance with the audit policy and plan designated by itself, the Audit and Supervisory Committee appropriately
audits directorsʼ decision-making and execution of duties in collaboration with the accounting auditor and the internal
audit unit from a standpoint that is independent of the Board of Directors.

Internal audit
The Companyʼs internal audit unit, which directly reports to the Audit and Supervisory Committee, conducts internal
audit based on the internal audit policy approved by the Board of Directors. The results of its audit are periodicallyreported to the Board of Directors.

Accounting audit
The Company has appointed Kanade Partnership as its accounting auditor from whom it receives audits from a fair andunbiased standpoint of an independent auditor.

proposals to the Board; and to level out the number of agenda items and narrow them down to only those that areappropriate have contributed to more active discussions at the Board meetings.

■ The pre-Board meeting brieﬁngs have become an arena for meaningful discussions with the departments executing

business and have ensured a more in-depth understanding of business strategies and the background and process
behind bringing matters to Board deliberation.

Matters to be addressed with high priority
While we were able to conﬁrm from the questionnaire survey and discussions the eﬀectiveness of our Board of Directors,
the following matters have been identiﬁed as items to be addressed with high priority:■ Ongoing eﬀorts to secure suﬃcient time for discussion

Corporate Governance

Audit and supervisory functions■ Continued eﬀorts to prepare materials that clearly indicated the focal points, risks, and issues; to systematically bring03
E nv i ronmen t & Gove rnanceA discretionary advisory body in which members discuss and exchange views on director appointment andcompensation. The majority of the members are outside directors whose appropriate involvement and advice ensure theobjectivity and transparency of the Committee.

In principle, Group Strategic Committee meetings are held once a week, and extraordinary meetings are held asnecessary. At the meetings, the committee makes decisions on important matters other than those resolved at the Boardof Directors meetings as well as matters delegated by the Board of Directors. It also receives reports on the status ofbusiness execution and other important items.

110

02

Evaluation method
Conduct
questionnaire
survey01
S t ra tegy

In principle, the Board of Directors meetings are held once a month, and extraordinary meetings are held as necessary.
During these meetings, the Board makes decisions on management policy, business strategy, and other importantmatters, and exercises oversight of directorsʼ performance of duties by, for instance, receiving reports on the status ofbusiness execution and other important matters.

To improve the eﬀectiveness of the Board of Directors, each year, the Company evaluates and analyzes Boardeﬀectiveness, also incorporating the self-evaluation of individual directors, and discloses the results. It also seeks to
improve Board eﬀectiveness on an ongoing basis by addressing the issues identiﬁed through the evaluation.

St o ry

Business execution and oversight functions

Evaluation of Board of Directors eﬀectiveness―― Level out the number of agenda items by systematically bringing proposals to the Board in accordance with anannual schedule; narrow down the agenda items as appropriate■ Eﬀorts to secure additional discussion opportunities with regard to proposals for which the Board felt the need forfurther discussions―― Secure opportunities for prioritized discussions on the following items, which have been identiﬁed as matters theBoard felt the need for further discussions

Performances and issues ofeach business

BCP measures

Cyber security measures

Further sophistication ofmarket operations system

Status of ease of working
and satisfaction levels of
employees

Succession planning111

｜Corporate Governance｜

The skills matrix of our directors and executive oﬃcers based on their specialization and experience is shown in thetable below. The Company deploys human resources with a wealth of experience, deep insight, and a high level ofexpertise to enable appropriate oversight of business management and achieve sustainable improvement of corporate
value. The ﬁelds in which directors not serving as Audit and Supervisory Committee members are particularly expected
to contribute are marked with “◎.”Maximum tenure of directors not serving as Audit and Supervisory Committee members

Director not serving as an Audit and Supervisory
Committee member (the president)

The term of oﬃce is one year. An individual can no longer be nominated as a director
candidate upon completion of his/her 10th term in oﬃce.

Director not serving as an Audit and Supervisory
Committee member (director other than the president)

The term of oﬃce is one year. An individual can no longer be nominated as a director
candidate after completion of the term in which he/she reaches 65 years of age.

Independent outside directors

112

Name

Reason for appointment

Taku Oizumi

Mr. Oizumi has abundant practical experience in ﬁnance through positions including the director-general of the Currency
Issue Department at the Bank of Japan, and also has a wealth of specialized knowledge accumulated through his active rolein corporate management as director and managing executive oﬃcer of Seven Bank, Ltd. Utilizing such knowledge, he canprovide supervision and advice on the Companyʼs business execution from a professional perspective, particularly in theareas of corporate planning, risk management, marketing, and overseas business. Through such supervision and advice, theCompany expects him to contribute to maintaining and improving management transparency and soundness and tostrengthening corporate governance. Accordingly, he has been appointed an outside director.

Naoko Nemoto

Ms. Nemoto has a wealth of specialized knowledge cultivated through her activities as a ﬁnancial expert, for instance,partaking in the rating and research of ﬁnancial institutions for many years at Standard & Poorʼs Ratings Japan, Inc. Utilizing
such knowledge, she can provide supervision and advice on the Companyʼs business execution from a professional
perspective, particularly in the areas of ﬁnancial strategy, overseas business, and market operations. Through suchsupervision and advice, the Company expects her to contribute to maintaining and improving management transparency
and soundness and to strengthening corporate governance. Accordingly, she has been appointed an outside director.

Name

Title

Shuji Tsuemura

President & Chief ExecutiveOﬃcer (Representative Director)◎●

Koichi Nakada

Director (Representative
Director)●◎

Yuji Kakuchi

Director
Director, Audit and Supervisory

Nobuhiro Torigoe Committee Member

Naoko Nemoto

Director, Audit and Supervisory
Committee Member (Outside)

Sakon Uda

Director, Audit and Supervisory
Committee Member (Outside)●●

Fumihiko Haga

Director, Audit and Supervisory
Committee Member (Outside)●●

Kimie Harada

Director, Audit and Supervisory
Committee Member (Outside)

Tomohiko Kikuzawa
Aki Yokogoshi

Board of Directors: 10/11 meetings
Audit and Supervisory Committee:
10/11 meetings
Nomination and Compensation
Committee: 4/4 meetings
Board of Directors: 10/11 meetings
Audit and Supervisory Committee:
10/11 meetings
Nomination and Compensation
Committee: 4/4 meetings

Sakon Uda

Mr. Uda has abundant management experience at consulting ﬁrm McKinsey & Company, as well as Japan Post Holdings
Co., Ltd. and Business Breakthrough Inc., among other companies, and also has a wealth of specialized knowledge
accumulated through his active role in corporate management as an outside director and chairperson of the Board of
Directors at Ebara Corporation. Utilizing such knowledge, he can provide supervision and advice on the Companyʼs businessexecution from a professional perspective, particularly in the areas of corporate planning, management strategy, governanceand risk management, marketing, consulting, investment and fund management, and HR strategy. Through suchsupervision and advice, the Company expects him to contribute to maintaining and improving management transparency
and soundness and to strengthening corporate governance. Accordingly, he has been appointed an outside director.

̶̶̶̶

Fumihiko Haga

Mr. Haga has a wealth of specialized knowledge accumulated through his active role in corporate management as an
executive oﬃcer of IBM Japan Corporation and subsequently as an executive operating oﬃcer and ﬁnance division director
at Kyndryl Japan Inc. Utilizing such knowledge, he can provide supervision and advice on the Companyʼs business execution
from an expert perspective, particularly in the areas of corporate planning, management strategy, governance and risk
management, and digital and IT strategy. Through such supervision and advice, the Company expects him to contribute tomaintaining and improving management transparency and soundness and to strengthening corporate governance.
Accordingly, he has been appointed an outside director.

̶̶̶̶

Kimie Harada

Ms. Harada has a wealth of specialized knowledge in the areas of ﬁnancial policy, securities, and the stock market as aprofessor at the Chuo University, Faculty of Commerce, and from her experience as a member of various committees of the
Ministry of Finance and the Financial Services Agency. Utilizing such knowledge, she can provide supervision and advice on
the Companyʼs business execution from an expert perspective, particularly in the areas of ﬁnancial and capital strategies,
ESG and sustainability, and market operations. Through such supervision and advice, the Company expects her tocontribute to maintaining and improving management transparency and soundness and to strengthening corporate
governance. Accordingly, she has been appointed an outside director.

̶̶̶̶

●

●

●

●

●

●

●

Shinzo Oya

●

●

●

●

◎

◎
◎

●

●

●

◎

●
●

●
●

●

●
●

Executive Oﬃcer (General
Manager of Audit Department)

◎

●

●

Harushige Sanbonmatsu◎●

DigitalandIT strategy

●

●
●

●

●

◎

Investment
MarketHRand fundmanagement operations strategy●●●

Managing Executive Oﬃcer(General Manager of General
Planning Department)

Muneto Yamada Executive Oﬃcer

Meeting attendance in FY2022

●

●

●
●

●

Taku Oizumi

Kenya Tatsuno◎●

Director, Audit and Supervisory
Committee Member (Outside)

Managing Executive Oﬃcer(General Manager of General
Planning Department)
Managing Executive Oﬃcer(General Manager of General
Planning Department)
Managing Executive Oﬃcer(General Manager of Human
Resource Development Department)◎

ESG andsustainability Marketing Consulting Global

●

●

●

●

●

●

●

●

●

●

●

●
●

02
03

Corporate Governance

In April 2022, we stipulated the maximum tenure of directors who are not members of the Audit and Supervisory
Committee. In doing so, we seek to prevent organizational rigidity, strengthen the governance structure, and further
invigorate the Board of Directors while stepping up eﬀorts to nurture successors.

Specialization and experience
Corporate
Financialplanning Governance andand riskManagement management capital
strategies
strategy01

E nv i ronmen t & Gove rnanceIn nominating director candidates, the president (a director) asks for the consideration of the Board of Directors following discussions
within the discretionary Nomination and Compensation Committee. For inside director candidates, individuals with integrity, a senseof ownership, and an innovative mind with the knowledge and experience to manage the Group in an accurate, fair, and eﬃcientmanner are selected. For outside director candidates, individuals with a wealth of experience and broad insight in general management
and specialized ﬁelds who can provide appropriate advice and suggestions in decision-making regarding the Groupʼs management andbusiness execution are selected. Outside director candidates should also have the ability to help maintain and improve the rationality
and soundness of the Groupʼs management and contribute to strengthening corporate governance. The reasons for the nomination ofeach candidate are stated in the convocation notice of the annual general meeting of shareholders. Any individual whom the Board of
Directors deems not to meet these qualiﬁcations will not be nominated as a director candidate. Regarding a director who hascommitted an act considered seriously unsuitable for a director, such as a violation of laws and regulations or misconduct, the Boardof Directors may decide to convene a general meeting of shareholders for the purpose of dismissing the individual. In addition to
directors, the Group also appoints executive oﬃcers. For executive oﬃcers, individuals determined to be fully versed in the Groupʼsmanagement in light of their knowledge and expertise and who can execute operations in their areas of responsibility fairly andeﬃciently are selected. Any individual deemed not to meet these qualiﬁcations will not be nominated as an executive oﬃcer. An
executive oﬃcer who has committed an act considered seriously unsuitable for an executive oﬃcer, such as violating laws andregulations or misconduct, may be dismissed. In appointing or dismissing executive oﬃcers, the president explains the reasons fortheir nomination or dismissal at the Board of Directors meetings. Moving forward, we intend to study and discuss the improvement of
our succession plan at the discretionary Nomination and Compensation Committee meetings and the Board of Directors meetings topass on our management values to the next generation of successors and sustainably enhance corporate value.

S t ra tegySpecialization and experience of directors and executive oﬃcers

St o ry

Process for appointing and dismissing directors and executive oﬃcers●

Skill areas that should be strengthened
The items shown below are the skill areas that require further strengthening in order for the Company to sustainably
improve its value. In addition to developing specialized talent in-house and placing resources mainly based on theirexperience, we also anticipate bringing in external talent with objective and eﬀective knowledge and experience so that
we can bolster our business foundation.
Skill item

Reason for selection

Consulting

The Company positions consulting and advisory as one of the priority business areas. While the level of consulting services
provided by the consulting subsidiary CC Innovation has improved, to provide further value to local customers and raise theregionʼs quality, we see the need to secure resources with more advanced skills and knowledge.

Investment
and fundmanagement

The Company positions investment and fund management as one of the priority business areas. Our investment subsidiary
QR Investment seeks to address the diversifying ﬁnancing needs through its funds, function as a leader of the regional
ecosystem, and thereby contribute to the growth and value enhancement of the overall region. Moving forward, to expand thescope of investees nationwide and overseas while maintaining focus on the Hokuriku region and to achieve a balance
between investment returns and the growth of investees along with contribution to the local community, we see the need tosecure resources with more advanced skills and knowledge.

Marketoperations

The Company positions market operations as one of the priority business areas. We are working to further sophisticate our market
operations by, for instance, transferring the Groupʼs core capital market functions to the investment advisory subsidiary FDAlcoto revamp our market operations structure. We are also working to optimize our portfolio by developing a model portfolio basedon a medium- to long-term scenario and engaging in preventive rebalancing in response to changes in the market environment.
To ensure stable income generation, we see the need to secure resources with more advanced skills and knowledge.

DigitalIT strategy

For over 20 years, the Company has implemented operational reforms driven by systems strategy, and still continues to work
on digital transformation to date. It also applies the accumulated knowledge in this area to help improve the productivity of
local customers through consulting and other services. In addition to speed and performance, security-related skills, such as
response to cyberattacks, are becoming more important in systems strategy. Accordingly, we see the need to secureresources with more advanced skills and knowledge.

113

｜Corporate Governance｜

Policy for determining director compensation, etc.

Directors and executive oﬃcers (as of June 30, 2023)

Directors

President & Chief
Executive Oﬃcer(Representative Director)

Koichi Nakada

Director(Representative Director)

Yuji Kakuchi
Director

Nobuhiro Torigoe
Director(Full-time) Audit andSupervisory Committee
MemberCompensation components and composition
Terms of provisionand composition

Fixedcompensation

Fixed monthly compensation paidin cash●Performancelinked monetarycompensation

Compensation paid in cash as per
the percentage shown in the tablebelow, based on the ROE of thecorresponding ﬁscal year

●

ー

●

Performancelinked stockcompensation

Compensation paid in restricted
stock as per the percentage shown in
the table below, based on the ROE ofthe corresponding ﬁscal year

●

ー

●

Fixed
Monetary

Performance-linked
Monetary

Stock

●

●

Taku Oizumi

Director(Outside) Audit andSupervisory
Committee Member

Director(Outside) Audit andSupervisory
Committee Member

Sakon Uda

Director(Outside) Audit andSupervisory
Committee Member

Fumihiko Haga
Director(Outside) Audit andSupervisory
Committee Member

Kimie Harada

Director(Outside) Audit andSupervisory
Committee Member

Directors (excluding the president)
Total

Fixed
Monetary

Performance-linked
Monetary

Stock

Total

8% or higher

45％

30％

105％

180％

50％

25％

90％

165％

7% or higher, but lower than 8%

45％

30％

75％

150％

50％

25％

65％

140％

6% or higher, but lower than 7%

45％

30％

45％

120％

50％

25％

40％

115％

5% or higher, but lower than 6%

45％

30％

25％

100％

50％

25％

25％

100％

4% or higher, but lower than 5%

45％

25％

20％

90％

50％

20％

20％

90％

3% or higher, but lower than 4%

45％

20％

15％

80％

50％

15％

15％

80％

2% or higher, but lower than 3%

45％

15％

10％

70％

50％

10％

10％

70％

1% or higher, but lower than 2%

45％

10％

5％

60％

50％

5％

5％

60％

Lower than 1%

45％

0％

0％

45％

50％

0％

0％

50％

Kenya Tatsuno, Managing Executive Oﬃcer (General Manager of General Planning Department)
Tomohiko Kikuzawa, Managing Executive Oﬃcer (General Manager of General Planning Department)
Aki Yokogoshi, Managing Executive Oﬃcer (General Manager of Human Resource Development Department)
Harushige Sanbonmatsu, Managing Executive Oﬃcer (General Manager of Management Administration Department)
Shinzo Oya, Executive Oﬃcer (General Manager of Audit Department)
Muneto Yamada, Executive Oﬃcer

Schematic illustration of the composition*
Fixed compensation (45%)

Naoko Nemoto

Executive oﬃcers

Director and president
ROE

Executive oﬃcer

Corporate GovernanceDirector not serving as Director serving as anan Audit and Supervisory Audit and Supervisory
Committee member
Committee member

Type

03
E nv i ronmen t & Gove rnanceShuji Tsuemura

In April 2022, we introduced a new compensation system for our oﬃcers. By increasing the ratio of performance-linked
compensation to total compensation, we have created a system that allows further value-sharing with our shareholders
while providing the oﬃcers with an incentive to improve the corporate value.
Eligible directors are paid a combination of (1) ﬁxed compensation (ﬁxed/monetary), (2) performance-linked
monetary compensation (variable/monetary), and (3) performance-linked stock compensation (variable/stock).

02
S t ra tegy

Outline of the compensation system

01
St o ry

The Companyʼs basic policy on director compensation is to establish a system, which incorporates compensation
linked to shareholder returns so that it serves as an incentive for directors to contribute to the local communityʼs
progress and thereby enhance the Companyʼs corporate value sustainably. In terms of compensation for individual
directors, the policy is to determine it at a level appropriate to each directorʼs responsibilities. Speciﬁcally, theremuneration of directors not serving as Audit and Supervisory Committee members comprises ﬁxed compensation,
performance-linked monetary compensation, and performance-linked stock compensation. Compensation of directors
serving as Audit and Supervisory Committee members, who take on a supervisory function, only comprises ﬁxed
compensation in light of their duties.
As a holding company, Hokkoku FHD develops and implements its compensation system in an integrated mannerwith Group companies. When an oﬃcer concurrently holds positions at two or more Group companies, ﬁxed
compensation will be divided based on a certain ratio.

Performance-linked
monetary
compensation (30%)

Performance-linked
stock
compensation (25%)＊Assuming compensation of the director and president at ROE of 5% or higher, but lower than 6% (the composition changes depending on the position and
the Companyʼs performance)

114

115

｜Corporate Governance｜｜Interview with outside directors
Taku Oizumi

Mr. Masahiko Nishiyama
Senior Stewardship Oﬃcer
Stewardship Development Department
Sumitomo Mitsui Trust AssetManagement Co., Ltd.

Since the transition to a holding company structure,including the preparatory stages, in what signiﬁcantways have the mentality and actions of the Board of
Directors and those within the Company changed? Do
you think these changes will steadily contribute to thecorporate culture and corporate value improvement?
Nemoto: Our corporate philosophy is to provide new value
to the local community and the customers through ourdiverse operations as an integrated regional company. I
feel that we have made progress in incorporating thisphilosophy into many of our institutional systems, and as aresult, our employees share the Companyʼs values.
Expanding our business performance while resolving theissues faced by the community, such as productivity
improvement and decarbonization, undoubtedly leads
to the enhancement of corporate value. Goingforward, strengthening integrated risk management andperformance evaluations across various business
operations will be our challenge.
Oizumi: As the ﬁrst change, the Company has broken
away from a focus on quantitative expansion. Over the past
several years, the Company had to write oﬀ a large amountof non-performing loans. This was because we could not
fully break away from the traditional management stylethat prioritized expanding the loan amounts without
suﬃciently understanding the borrowersʼ businesses.
Reﬂecting on this, the Company shifted its management
focus to the identiﬁcation (discovery) and resolution of theissues faced by the customers. This was the second
change. We have introduced services such as management
consulting and investment advisory for our customers, aswell as support services, to enhance customer productivity
through improved operational processes, DX, and cashless
payment, among other initiatives. To provide these services,
we established a group of subsidiaries, and to oversee
these companies, we established a holding company. These

116

Q2

The Board of Directors is called upon to reconcile
stakeholdersʼ conﬂicts of interest and decide on
setting priorities. Do you feel the Companyʼs
corporate philosophy and materiality form an
important foundation for such decision-making?
Nemoto: Our corporate philosophy has taken root
within the Company and has become the basis for
decision-making at the Board of Directors meetings aswell as other meetings. For instance, eliminating the handlingfees for our corporate internet banking service may reduce
our income in the short term, but we think it will raise
productivity in the local community and, in turn, contributeto enhancing our corporate value in the long term. As an
outside director, I pay close attention to balancing theinterests of various stakeholders and seeking optimal
methods while respecting our corporate philosophy.
Oizumi: The corporate slogan, “Quality Company, Good
Company. Together into the future,” encapsulates our
corporate philosophy and brand philosophy, and I value
each word of it. How and to what extent can we elevate ourquality and goodness with limited management resources
and become a company that can build a successful future
together with society? When we contemplate balancing
interests among the stakeholders and setting priorities, we
seem to end up going back to each word of this slogan tothink, discuss, and make decisions, even when weourselves are not clearly aware of doing so.

Q3

How much were you involved in the formulation of themedium- to long-term business strategy? How will you
get involved toward the accomplishment of the plan?
Nemoto: The outside directors have been actively involved
in developing the medium- to long-term business strategy,
expressing their opinions from various perspectives at theBoard of Directors meetings and preliminary brieﬁng
sessions. In terms of gathering information, in addition toreceiving reports from the Audit Department, w e haveQ4

I believe it is important for regional ﬁnancial
institutions to support customers in their response to
climate change. Do you think Hokkoku FHD Groupʼseﬀorts are suﬃciently meeting such expectations?
Nemoto: We have raised our FY2030 target for CO₂
emissions reduction to 100% and are actively working
toward this goal by using renewable energy andintroducing energy-saving facilities, among other means.
We have also stepped up our risk analyses based on TCFD
recommendations and shared our analyses of physical andtransition risks with our customers. In consulting, we are
gradually achieving results, for instance, in supporting the
SGDs declaration of our customers. Our challenge
going forward is to spread our expertise on climatechange-related responses to all employees so that we canprovide services to a wider range of customers.
Oizumi: We are working to provide overarching support
that covers all aspects of customersʼ climatechange-related responses. On the other hand, the level ofawareness and the capacity to cope with climate change
vary from customer to customer. Letʼs say there are threesteps in the support process: (1) fostering risk awareness;(2) providing advice that contributes to risk reduction andthe identiﬁcation of new business opportunities; and (3)providing support on concrete responses. I think many of
our customers are still in the ﬁrst step, and we have yet tosee full-scale activities in steps two and three. The
Hokuriku region has unique geological potential togenerate renewable energy. Keeping this in mind as
well, I hope to see companies move on to steps two andthree at an accelerated pace.

Q6

02
03

Corporate GovernanceQ1

two changes have dramatically transformed our corporate
culture. I am convinced that our corporate value will soar
even higher, as will the Companyʼs contribution to the local
community, as long as we continue to enhance the content
and quality of these services with a sense of speed.

Nemoto: Our Board is very diverse, even in comparison toother companies. The inside directors collectively have abalanced background in digital, ﬁnance, global business,market operations, and sales. The outside directors areexperts in the areas of consulting, IT, regulatory aﬀairs, andasset management, with their skills matching the strategic
direction of the Company. Eﬀorts are made to mitigate theinformation asymmetry between those within and outside
the Company, for instance, through the use of Microsoft
Teams and the provision of various opportunities toexchange opinions.
Oizumi: To properly manage and supervise each Group
company and enhance the value of the overall Group, it
is necessary to position diverse talent in both the Boardof Directors and the execution team. In this respect, wenewly appointed three outside directors (serving as
Audit and Supervisory Committee members) in June
2023, and we substantially increased the number of
executive oﬃcers this spring. As a result, we have amore balanced line-up of people with diverse experienceand skills on our Board and the execution team. I am
conﬁdent that the Groupʼs management structure will bebolstered further, provided these members cooperate
closely without becoming overly cozy with each other.

01

E nv i ronmen t & Gove rnanceInterviewer

Director, (Outside) Audit &Supervisory Committee Member

In light of the Board of Directorsʼ role to manage andsupervise the business execution of Hokkoku FHD
subsidiaries to enhance corporate value, how do you
evaluate the lineup, diversity, and skills matrix of theBoard members?

S t ra tegy

Director, (Outside) Audit &Supervisory Committee Member

Q5

St o ry

Naoko Nemoto

worked to grasp the actual situations by obtaining direct
input from department heads and interviewing young
employees on the front lines, among other means. Moving
forward, we hope to continue obtaining input from internaland external sources through various channels andmonitor steady implementation of the plan.
Oizumi: At Hokkoku FHD, the directors and those in chargeof business execution hold discussions on the medium- tolong-term business strategy several times before the plan
becomes a formal agenda item for the Board of Directors
meeting. This process is very important. Our approach is toannually update the medium- to long-term businessstrategy spanning the next 10 years. While this approach
suits the rapidly changing times, the annual updates could
potentially erode the core concepts originally outlined at
the time of plan formulation. Therefore, to ensure that theessence of the medium- to long-term business strategy
remains intact, the preliminary involvement of the directors
is indispensable. Some of the businesses may not progressas planned. At such times, it is important to calmly analyze
and understand why things are not going well. In addition
to addressing the overall Groupʼs medium- to long-termbusiness strategy, the Board of Directors also asks theindividual subsidiaries and business departments toregularly report their latest status at the Board meetings.
During discussions at such meetings, one of theimportant roles of the Board is to help these parties
recognize the issues and provide them with opportunities
to develop new measures for the future.

What is your view on CEO succession?
Nemoto: I realize that CEO evaluation and succession
planning are important responsibilities for outside
directors. For the revision of the compensation system
last year, we had several discussions before making aﬁnal decision. Outside members comprise the majorityof the Nomination and Compensation Committee, andthe Committee has made progress in strengthening its
independence and transparency in areas such as
clariﬁcation of evaluation standards. I think having many
proactive and highly motivated resources is a strength of
the Company. I also believe it is the role of the Committee
to develop next-generation leaders and develop a
structure in which they can thrive.
Oizumi: According to internal rules, the maximum tenureof the Companyʼs president is 10 years. Three years
have passed since the current president took oﬃce, so
there are seven more years until maximum tenure. Thereis ample time to select and foster a successor.
This spring, we signiﬁcantly increased the number of
executive oﬃcers. From such a pool of resources, theNomination and Compensation Committee will be
nominating and selecting the successor candidates
deemed ﬁt to entrust the future management of theCompany. If there is a need to revise the current structureof the Nomination and Compensation Committee tofurther improve transparency of the nomination andselection process, I hope to actively engage in discussions.

117

｜Risk Management System Initiatives｜

Basic policy and operating structure for risk management

Processes under the risk appetite framework

Finalize business plan118

https://www.hfhd.co.jp/ir/disclosure/pdf/disclosure̲2023̲03.pdf┃1. Purpose
As an integrated regional company, we seek to enhance and strengthen our risk management system by putting in placea business continuity system. We have formulated the basic policy on business continuity to set forth our basic stanceon the business continuity system of Hokkoku FHD and the overall Group in accordance with the basic policy on internalmanagement (Basic Policy on Internal Control System) and to make it known across the entire organization.

┃２. Basic approach to management
In an emergency, we pay attention to the following points while we minimize the emergencyʼs impact on our operations,
restore operations swiftly and eﬃciently, and maintain a certain level of business continuity.

We formulate a draft business plan for integrated management ofrevenue and risks in order to secure the capital necessary for operating
customer-centric businesses and improving our business model on an
ongoing basis.

1

Ensure the safety of our customers, oﬃcers and employees, and other related parties2

Contribute to maintaining economic activities within the community through business continuity and swift
restoration and, at the same time, minimize the impact on payment systems

Risk appetite, ﬁnancial plan, and business strategy must go hand in
hand. We set risk assets and risk indicators in accordance with ourrevenue , capital adequacy ratio, and the business strategies of the lending
departments, capital markets departments, and priority businesses.

4

To verify the adequacy of our risk appetite, we perform stress tests
using a portfolio that reﬂects our ﬁnancial plan and business strategy toanalyze the impact of risks on our revenue and capital adequacy ratio.

Based on the results of the stress tests, we put our business plan
incorporating our risk appetite, ﬁnancial plan, and business strategy
through for deliberations and resolutions at the Group Strategic
Committee and Board of Directors meetings.

Allocate ﬁnancial targets
and risk appetite

After establishing a clear image of the earnings structure we aim for, we
determine the total amount of risk assets to be allocated. We thenallocate the risk assets to each business department.

Monitor results and review

We regularly monitor compliance with the risk appetite and revise theplan as necessary should there be a deviation from the plan or changes
in the external environment.

3

Minimize loss of opportunities due to suspension of operations, etc.
Build the necessary system to ensure the eﬀectiveness of the above and also conduct training

02
03

Risk Management System Initiatives＊Risk appetite: The type and amount of risks an organization is willing to accept to achieve its objectives and business plan.

Verify through stress tests

Please click here for our basic policy on the management ofvarious risks (Japanese only):01

E nv i ronmen t & Gove rnance

The Company does not treat risks merely based on a constraint formula. Instead, it uses the risk appetite* framework tomonitor risks according to predeﬁned risk levels acceptable for business execution. We set risk asset targets consistent
with our ﬁnancial plan and business strategy, and we work to achieve appropriate risk-taking and income generation by
allocating the risk assets to each business department, and then regularly monitoring the status of such risk assets andincome. Based on the framework shown below, we optimize the risk-return trade-oﬀ to accomplish our medium- tolong-term business strategy.

Set risk appetite＊Operational risk: A generic term referring to clerical risks, systems risks, and other risks (including legal, human, tangible asset, management, and reputational risks)

Basic policy on business continuity

Risk appetite framework

Formulate a draft
business plan

The Company uses the universally applied index VaR to measure credit risks for loans as well as market risks (interest
rate and price ﬂuctuation risks) for market-related products and banking accounts. For these quantiﬁed risks, weformulate integrated risk management guidelines each year, based on which we establish a capital allocation budget.
We then work to control the risks accurately by tracking actual results. We compare our integrated risk, which includes
operational risk*, with our core capital-based capital to conduct risk management that ensures capital suﬃciency.
Furthermore, we perform stress tests to evaluate our ﬁnancial soundness, assuming sudden changes in the ﬁnancial
markets and other unforeseen circumstances. During the regular formulation of comprehensive budgets, the Company
also conducts a stress-based assessment of risk appetite.

S t ra tegy

As of late, business opportunities for ﬁnancial institutions have expanded in tandem with the progress in ﬁnancial
liberalization, globalization, and deregulation. Hokkoku FHD transitioned to a holding company structure in October
2021 and has substantially expanded its business domains since. Meanwhile, the risks associated with business
operations have rapidly diversiﬁed and are also becoming more complex. Going forward, it will become important for
the Company to accurately control risks based on the principle of self-responsibility and to secure appropriate incomecommensurate with such risks.
The Company has laid out the basic matters concerning risk management in its Integrated Risk Management Rules.
The administrative departments of each Group company engage in risk management, while the Management
Administration Department of the holding Company manages overall risks in an integrated manner as the supervising
department.

Integrated risk management system

St o ry

We have put in place an information-gathering system to accurately capture and analyze the ever-diversifying andcomplex risks surrounding corporate management. By doing so, we are working to strengthen our risk management
system so that we can manage and control the risks appropriately.

┃3. Potential emergencies
Emergencies include disasters, pandemics, system failures, cyberattacks, and reputational damage.

┃4. Priority tasks and recovery targets
As a company providing highly public ﬁnancial services, we prioritize and concentrate our management resources on
operations that should be addressed ﬁrst during restoration to prevent disruption of economic activities essential forsociety. For those operations given priority, we set target recovery times and recovery points and work to meet those targets.

┃5. Rules and regulations
In line with the subject policy, we have formulated the Basic Rules for Business Continuity to clarify what has been
decided and also set forth subordinate rules and regulations, taking steps to ensure that all employees are aware of them.

┃6. Continuous improvement
We regularly conduct training based on the business continuity plan, assess the degree of awareness and proﬁciency
regarding emergency responses among our oﬃcers and employees, and periodically verify eﬀectiveness. To enhance
our ability to maintain business continuity in response to changes in the external environment and diversiﬁcation of ouroperations, we will update our rules and regulations for business continuity as appropriate.

119

｜Compliance Initiatives｜
In accordance with our Policy on Compliance with Laws and Regulations, etc., we regard compliance as “observing laws
and regulations as well as social norms and internal rules and regulations” and consider it a management issue of thehighest priority. Upholding thorough recognition and observance of compliance as our basic policy, we are working toestablish a compliance system, as shown below.

The Company considers the prevention of money laundering and the ﬁnancing of terrorism a priority management issue
and implements eﬀective measures against money laundering in accordance with the Guidelines for Anti-Money
Laundering and Combating the Financing of Terrorism released by the Financial Services Agency. Speciﬁcally, we properly
identify and evaluate the money laundering and terrorism ﬁnancing risks pertaining to the products and services we
handle and constantly verify and enhance risk mitigation measures through, for instance, thorough conﬁrmation at thetime of transactions, ongoing management of customers, and detection and reporting of suspicious transactions. We arealso bolstering measures to protect customer assets from ﬁnancial crimes such as bank transfer scams.

■Understanding and thorough awareness of corporate philosophy, etc.
All oﬃcers and employees will comply with our Ethics Charter with a thorough understanding and recognition of theCompanyʼs corporate philosophy, management guidelines, and code of conduct, bearing in mind that trust andconﬁdence are won through oneʼs day-to-day eﬀorts.

■Training and education■Implementation of compliance programs
We will appropriately check, report, and evaluate the status of compliance-related activities based on complianceprograms (activity plans) and take eﬀective corrective and recurrence prevention measures under the directive of theBoard of Directors and other bodies.

Compliance operation structureGroup companies

Hokkoku Financial Holdings
Reportresults
InstructManagement
Administration
Department(department
overseeing
compliance)Group
Strategic
Committee

Report /discuss

ReportConsultation
hotline(whistleblowing
system)Instruct /communicate /train

ReportInquire / consult /report / notify

Reportresults

Notify /consultOﬃcersand employees
Instruct /communicate /train

Notify /inquire /consult

Complianceoﬃcers*Mutualchecks andbalances

Sales managers＊A compliance oﬃcer isplaced in each company.

120

The Company has in place a whistleblower system for all Group employees (including oﬃcers and employees who haveleft the Company within one year), with the head of the compliance group, the head of the human resource developmentgroup, and an attorney designated by the Company serving as the contact points for reporting.
To prevent incidents of misconduct due to violations of laws and other wrongdoings and to detect them at an earlystage, we have established a system to gather various voices. This includes biannual interviews aimed at preventing
misconduct, where employees can consult their supervisors regarding work-related issues and personal concerns. We
also conduct a compliance questionnaire survey for all employees, through which comments can be sent directly to thedepartment overseeing compliance. Through this system, we seek to protect the whistleblowers. In FY2022, weaddressed 19 requests and consultations concerning the work environment and other matters.
In addition to preventing misconduct, we have dedicated staﬀ available to discuss employeesʼ health, illness, family
concerns, and overall mental health issues, as well as career consultations.

03

Compliance Initiatives

Compliance management system

Board
of
Directors

Please click here to view our educational videos on ﬁnancial crimes. (Japanese only)
https://www.hokkokubank.co.jp/customer/lifeplan/for̲students/for̲parents.html

Whistleblower and consultation system (consultation hotline)

At Hokkoku FHD, the Board of Directors, the Group Strategic Committee, the compliance oﬃcers at each operational
department and sales branch, and the Management Administration Department take on active roles in ensuring
compliance.
The Management Administration Department, as a department overseeing compliance, centrally collects, manages,
studies, and analyzes compliance-related information and takes necessary measures while also formulating andimplementing compliance programs (activity plans).
The Board of Directors and other bodies receive compliance-related reports regularly or as needed and deliberate on
important measures.
Compliance oﬃcers are placed at each operational department and sales branch to establish a system of checks andbalances at each workplace.

Approve

Given the recent increase in the number of specialized fraud victims in Japan, we conﬁrm with our customers the purpose of theirtransactions when they request a large amount of cash payment or fund transfer over the counter. To protect customers from banktransfer scams using ATMs, we display cautionary messages on the transfer operation screens and also have installed devices to playaudio announcements at some ATM corners to thoroughly alert customers.
We have created and posted on our website educational videos on ﬁnancial crimes targeting young people.
We regularly update our training materials to build and strengthen our management system so that all employees, including
management, can work together to prevent ﬁnancial crimes and deepen their knowledge and understanding regarding the preventionof money laundering and ﬁnancing of terrorism.

02

E nv i ronmen t & Gove rnance

We will instill compliance awareness through training, education, and case studies. At the same time, the departments
overseeing compliance will establish a monitoring system, and the compliance oﬃcers at each operational department
and sales branch will step up eﬀorts to prevent violations.

■ Initiatives toward preventing ﬁnancial crimes01
S t ra tegy

Toward prevention of money laundering and ﬁnancing of terrorism

St o ry

Basic approach

Initiatives toward strengthening compliance and enhancing integrity
In addition to strengthening compliance, we take various steps to encourage our employees to think independently andproactively in their pursuit of enhancing integrity.
Integrity
Conscience /autonomous / voluntary
Compliance
Social rules / ethics
Rules of the society

Legal compliance
Law

Think independently
and proactively

Do what has been
decidedAbide by the law

Conduct
discussions in
the workplace

Conduct
training basedon job level

Prohibitexcessiveentertainment
with business
partners

Prohibitreceipt of gifts
from business
partners

Transparencyof the organization

Whistleblower
and consultation
systemEnhancementof integrity

Conduct
complianceinterviews withsupervisors

Prohibitcollusion withbusiness partners
and abuse ofbusiness
positions

Conduct
compliancequestionnaire
surveyPlease click here for more information on other compliance-related initiatives.
(Japanese only)
https://www.hfhd.co.jp/compliance/

121

｜IR Activities｜｜Group Company Information｜(as of June 30, 2023)

Main IR activities undertaken
Date founded

FY2020 results

FY2021 results

FY2022 results

One-on-one meetings withinstitutional investors

42 times / 80 participants

37 times / 89 participants

61 times / 84 participants

Financial results brieﬁng sessions foranalysts and institutional investors―

Conferences hosted by securities
companies

3 times*¹ / 29 participants

1 time / 5 participants

3 times*¹ / 27 times

December 18, 1943

Headquarters location 2-12-6 Hirooka, Kanazawa, Ishikawa, Japan

Representative Shuji tsuemura, President & Chief Executive Oﬃcer,
Representative Director

Representative Shuji Tsuemura, President & Chief Executive Oﬃcer,
Representative Director

Business

Bank holding company

Business

Banking business, leasing business

Share capital¥10,000 million

Share capital¥26,673 million

Websitehttps://www.hokkokubank.co.jp/

Exchange listing Tokyo Stock Exchange Prime Market
Websitehttps://www.hfhd.co.jp/

Company name The Hokkoku General Leasing Co., Ltd.

Company name The Hokkoku Credit Service Co., Ltd.

Date founded

Date founded

April 27, 1974

June 17, 1981

Headquarters location 2-2-15 Katamachi, Kanazawa, Ishikawa, Japan

Headquarters location 2-2-15 Katamachi, Kanazawa, Ishikawa, Japan

Representative Yuji Kakuchi, President and Representative Director

Representative Haruki Maekawa, President and Representative Director

Leasing business――Business

Business

Credit card business

Share capital¥90 million

Share capital¥90 million

Websitehttps://www.hfhd.co.jp/h-generalleasing/

Websitehttps://www.hokkokucard.co.jp/

Brieﬁng sessions for individual
investors―――

Brieﬁng sessions for individual
investors (online)

2 times / 470 participants

1 time / 405 participants

1 time / 503 participants＊1: Small meetings

Online brieﬁng session for individual investors

Company name The Hokkoku Gurantee Service Co., Ltd.

Company name The Hokkoku Servicer, Ltd.

Date founded

Date founded

July 7, 1983

September 21, 2011

Headquarters location 2-12-6 Hirooka, Kanazawa, Ishikawa, Japan

Headquarters location 2-2-15 Katamachi, Kanazawa, Ishikawa, Japan

Representative Kazuya Nakamura, President and Representative Director

Representative Akira Nishita, President and Representative Director

Business

Consumer credit guarantee businessBusiness

Debt management and collection business

Share capital¥90 million

Share capital¥500 million

Websitehttps://www.hokkokubank.co.jp/as̲service/index.html

Websitehttp://www.hokkoku-servicer.co.jp/

Presenter: Tomohiko Kikuzawa, Managing Executive Oﬃcer, General Manager of General Planning Department

In November 2022, we held an online brieﬁng session for our individual investors.
Approximately 500 investors have viewed the session in which we answered the questions received,
primarily concerning our business strategy.
The video of the session is available for viewing through November 13, 2023.

Share and shareholder information (as of March 31, 2023)

Please accessthe video ofthe online
brieﬁng session
from here.

Status of shares

Distribution by shareholder type

Number of shares Total number of authorized shares
58,250 thousand shares

Financial instruments
business operators: 1.16%

Total number of issued shares
26,908 thousand shares

National and local
governments: 0.07%

Foreign entities,
etc.: 12.87%(including 1,704 thousand treasury shares)

Individuals
and others:
29.89%

Note: The number of shares is rounded down to
the nearest thousand shares.

Number of shareholders at the end of FY2022

Rating information
R&I rating:A

10,478Other
entities:
27.89%

Financial
institutions:28.12%

Note: Of the 1,704 thousand treasury shares, shares constituting one unit
are included in “individuals and others,” and shares less than one
unit are included in “status of shares less than one unit.”

122

Company name The Digital Value, Ltd.

Company name The CC Innovation, Ltd.

Date founded

Date founded

November 22, 2019

June 10, 2021

Headquarters location 1-3-1 Kyobashi, Chuo-ku, Tokyo, Japan

Headquarters location 2-12-6 Hirooka, Kanazawa, Ishikawa, Japan

Representative Masaki Iwama, President and Representative Director

Representative Takayasu Tada, President and Representative Director

Business

System development and operation management businessBusiness

Consulting business

Share capital¥90 million

Share capital¥490 million

Websitehttps://www.digitalvalue.co.jp/

Websitehttps://www.ccinnovation.co.jp/

Company name The QR Investment, Ltd.

Company name The FDAlco, Ltd.

Date founded

Date founded

June 10, 2021

May 31, 2021

Headquarters location 1-16 Musashimachi, Kanazawa, Ishikawa, Japan

Headquarters location 2-12-6 Hirooka, Kanazawa, Ishikawa, Japan

Representative Fumio Hamano, President and Representative Director

Representative Yutaka Imai, President and Representative Director

Business

Fund administration and management businessBusiness

Investment advisory business

Share capital¥90 million

Share capital¥90 million

Websitehttps://www.hfhd.co.jp/qri/Websitehttps://www.fdadvisory.co.jp/index.html

Company name The COREZO, Ltd.

Company name The BPO Management, Ltd.

Date founded

Date founded

March 16, 201003

IR Activities / Group Company Information＊Company analysis report by
Shared Research Inc. isavailable for viewing.

HOKKOKU GUARANTEE SERVICE

02

E nv i ronmen t & Gove rnance

Activities

Date founded

Headquarters location 2-12-6 Hirooka, Kanazawa, Ishikawa, Japan01
S t ra tegy

IR materials foruse in FY2023 areavailable here.

October 1, 2021

Company name The Hokkoku Bank, Ltd.

St o ry

Company name Hokkoku Financial Holdings, Inc.

At the time of the announcement of our ﬁnancial results, we disclose detailed IR presentationmaterials and accordingly notify our institutional investors.
Following the disclosure, we hold one-on-one meetings mainly between investors and ourpresident and CEO.
From the perspective of fair disclosure, the details of the questions and answers during theone-on-one meetings are made public following such meetings.
Executive oﬃcers, including those from the sales departments, and personnel in charge from thecorporate planning departments also attend the one-on-one meetings. This allows us to incorporate
investor perspectives when we implement our business strategy and foster management talent.

April 1, 2022

Headquarters location 2-12-6 Hirooka, Kanazawa, Ishikawa, Japan

Headquarters location 2-12-6 Hirooka, Kanazawa, Ishikawa, Japan

Representative Satoshi Sono, President and Representative Director

Representative Koichi Nakada, President and Representative Director

Business

EC mall operation businessBusiness

Outsourcing business

Share capital¥100 million

Share capital¥30 million

Websitehttps://shopping.corezo.co.jp/

Websitehttps://www.hfhd.co.jp/bpomanagement/123

｜Group Financial Data｜
Consolidated balance sheet(Millions of yen)
As of March 31, 2022

Consolidates statement of income

As of March 31, 2023
Ordinary income

Cash and due from banks

1,607,871

1,354,859

Call loans and bills bought

65,000141,000

Monetary claims bought

3,052

Money held in trusts

Fiscal year ended
March 31, 2023

84,73084,74338,31923,98924,061

3,266

Interest and dividends on securities

11,37813,701

13,52813,535Interest on call loans and bills bought

130

44

Securities

1,356,079

1,468,300

Interest on deposits with banks

573

491

Loans and bills discounted

Other interest income

1420Interest income

2,523,613

11,138

11,684

Trust fees

Lease receivables and investment in leased assets

35,19536,445

Other assets

37,364

Tangible ﬁxed assets

31,388

Buildings, net

10,345

10,202

Recoveries of written oﬀ receivables

Land

16,79816,904

Construction in progress

1,265

2,332

Other tangible ﬁxed assets

2,978

2,662

9,949

8,539

Interest on deposits

9,619

8,207

Interest on negotiable certiﬁcates of deposit

1

0

330

331

Interest on call money and bills sold

34

1,684

149

2,169

Software
Other intangible ﬁxed assets

00Fees and commissions

9,487

9,628

51,111Other operating income

17,55915,897

32,102Other income

21,59520,897

360

263

Other

21,235

20,634

Ordinary expenses

65,563

68,696

494

4,149

109

103

Interest expenses

265

4,617

Interest expenses on cash collateral received for securities lent

17,986

17,282

Interest on borrowings and rediscounts

Reserve for possible loan losses（61,849）（62,631）

Total assets

5,712,233

5,603,724

Deferred tax assets
Customersʼ liabilities for acceptances and guarantees

4

180

179

17

7

Fees and commissions

3,578

3,517

Other operating expenses

13,79921,847

General and administrative expenses

31,03830,992Other expenses

16,651

8,187
3,269

Other interest expenses

4,257,200

4,360,798

1,000

−

Call money and bills sold

618,824

532,156

Guarantee deposit received under securities lending transactions

313,497

360,955

Provision of reverse for possible loan losses

11,357

Borrowed money

155,985

26,553

Other

5,294

4,917

1

3

19,167

16,04620,00020,000

731

70

154

164

5

70

53,752

42,925

747

712

Deposits
Negotiable certiﬁcates of deposit

Foreign exchanges
Bonds payable
Borrowed money from trust account
Other liabilities
Reserve for bonuses

Ordinary proﬁt
Extraordinary income
Gain on disposal of non-current assets
Gain on revision of retirement beneﬁt plan
Extraordinary losses

726

−

3,952

1,554

2,398

1,376

2,492

1,460

Reserve for management board beneﬁt trust

496

410

Loss on impairment

601

93

Reserve for reimbursement of deposits

127

96

Business restructuring expenses

858−

Reserve for loss on refund of interest

19

2

Proﬁt before income taxes

15,946

14,562

Deferred tax liabilities

4,368

1,185

Income taxes‒current

5,723

2,305

Deferred tax liability arising from revaluation of land

1,412

1,411

Income taxes‒deferred

596

3,216

Acceptances and guarantees

17,986

17,282

Total income taxes

6,319

5,522

5,447,975

5,366,036

Proﬁt

9,626

9,040

Net deﬁned beneﬁt liability

Total liabilities

Loss on disposal of tangible ﬁxed assets

Proﬁt attributable to non-controlling interests
Proﬁt attributable to owners of parent

Net assets
10,000Common stock

10,000Capital surplus

29,727

27,139Retained earnings

182,357

188,428

Treasury stock（3,124）（8,216）

Total shareholdersʼ equity

218,960

217,351

Proﬁt

Valuation diﬀerences on available-for-sale securities

36,652

11,332Other comprehensive income

Net deferred gains on hedging instruments
Land revaluation surplus
Remeasurements of deﬁned beneﬁt plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

238

299

9,387

8,741

Consolidated statement of comprehensive income(Millions of yen)
Fiscal year ended
March 31, 2022

Fiscal year ended
March 31, 2023

9,626

9,040

（25,934）（25,254）

115（2）

Valuation diﬀerences on available-for-sale securities（27,030）（25,269）

2,296

2,296

Net deferred gains on hedging instruments

119

（118）

（1,467）（1,333）Remeasurements of deﬁned beneﬁt plans

976

37,597

12,292Comprehensive income
Total comprehensive income attributable to:

7,701

8,044

264,258

237,688

5,712,233

5,603,724

Owners of parent
Non-controlling interests

03

Group Financial Data

Liabilities

Interest on bonds

1

02

E nv i ronmen t & Gove rnance

2,585,262

Foreign exchanges

01
S t ra tegy

36,087

Interest on loans and discounts

Intangible ﬁxed assets

124

Fiscal year ended
March 31, 2022

St o ry

Assets(Millions of yen)133

（16,308）（16,213）（16,424）（16,562）

116

348

125

｜Group Financial Data｜

Consolidated statements of changes in net assets(Millions of yen)

Fiscal year ended March 31, 2022

Consolidated statement of cash ﬂows

Fiscal year ended
March 31, 2023

Common stock

Capital surplus

26,673

13,053

Treasury stock

Retained earnings
176,013

Total

（663）

Proﬁt before income taxes

15,946

14,562

Depreciation

4,331

4,190

Cash ﬂows from operating activities

215,077

Changes during the year
Changes by share transfer

16,673（16,673）−

Cash dividends
Proﬁt attributable to owners of parent（2,521）

9,387

9,387

（497）

−
（3,041）（3,041）

Purchase of treasury stock82

82

Disposal of treasury stock（497）

Cancellation of treasury stock

−

497

（23）

（23）

Reversal of land revaluation surplus
Net changes in items other than shareholdersʼ equity
Balance at end of the year

（16,673）

16,6736,344（2,461）

3,882

10,00029,727

182,357（3,124）

218,960

Balance at beginning of the year

63,560Net deferred Landgains (losses) revaluation
on hedging
surplus
instruments

（3）

2,272

Remeasureme
nts of deﬁned
beneﬁt plans（2,443）

Total accumulated Non-controlling
otherinterests
comprehensive
income63,385

7,806

Cash dividends

14,854（3,700）Net decrease (increase) in call loans and others

53,044（76,214）

Net increase (decrease) in call money and others（99,869）（86,668）

83,13047,458976（25,788）（105）（25,894）23

976（25,788）（105）（22,011）36,652115

2,296

37,597

7,701

264,258(Millions of yen)
Shareholdersʼ equity
218,960

Changes during the year

Cancellation of treasury stock（2,670）（2,670）

8,741

8,741

（2,562）

Reversal of land revaluation surplus（8,081）

427

401

2,562

−
0

0

−

Net changes in items other than shareholdersʼ equity
Total changes during the year
Balance at end of the year−

（2,588）

6,070（5,091）（1,609）27,139188,428（8,216）217,351

10,000

Accumulated other comprehensive income

Balance at beginning of the year

Valuation
diﬀerences onavailable-for-salesecurities

36,652

Net deferred Landgains (losses) revaluation
on hedging
surplus
instruments

115

2,296

Remeasureme
nts of deﬁned
beneﬁt plans（1,467）

Total accumulated Non-controlling
otherinterests
comprehensive
income37,597

7,701

Total net
assets264,258

Changes during the year
（2,670）Proﬁt attributable to owners of parent

8,741

Purchase of treasury stock（8,081）

Disposal of treasury stock

401

Cancellation of treasury stock−Reversal of land revaluation surplus
Total changes during the year
Balance at end of the year

126

105

−

Net decrease (increase) in foreign exchange assets

（359）

（545）

Net increase (decrease) in foreign exchange liabilities（0）

Net decrease (increase) in lease receivables and investment in leased assets

384

Net decrease (increase) in cash collateral paid for ﬁnancial instruments
Net increase (decrease) in borrowed money from trust account（1,487）1（1,672）
3,387

9

9

24,747

24,471

Interest paid

（427）

（3,955）

Other, net

10,692（12,827）

Subtotal

302,374（121,068）

Income taxes refund

−

03

1,315

Income taxes paid, net of refund（8,257）（9,196）

Net cash provided by (used in) operating activities

294,117（128,949）

Cash ﬂows from investing activities（800,593）（489,726）

Proceeds from sale of securities

555,992

298,613

Proceeds from redemption of securities

86,48860,669Interest and dividends received on investments

13,694

17,125Purchase of tangible ﬁxed assets（2,243）（2,477）Purchase of intangible ﬁxed assets（2,971）（2,569）Purchase of securities

Proceeds from sale of tangible ﬁxed assets
Net cash provided by (used in) investing activities

496

1,000

（149,137）（117,364）（2,519）（2,673）

Cash ﬂows from ﬁnancing activities

Cash dividends

Net changes in items other than shareholdersʼ equity

Net decrease (increase) in trading account assets

Interest and dividends received

Total（8,081）

Net increase (decrease) in guarantee deposit received under securities lending transactions

02

Group Financial Data

Net decrease (increase) in due from banks (excluding due from the Bank of Japan)

23

（25）

640

102,598

119

Disposal of treasury stock（6）（19,204）（129,432）

119（3,124）（15）（17,807）

19,639（26,908）

Treasury stock

4,149（11,325）

219,488（26,908）

Fiscal year ended March 31, 2023

Foreign exchange losses (gains), net

494（16,619）−（38,319）

Net increase (decrease) in borrowed money (excluding subordinated borrowings)（23）（1,467）

Losses (gains) on money trusts（36,087）

Net increase (decrease) in deposits

Reversal of land revaluation surplus

Purchase of treasury stock

（324）

−

−

Proﬁt attributable to owners of parent（17）

Increase (decrease) in reserve for customer service points

61,648Cancellation of treasury stock

Cash dividends

（30）

（13）

29,60382

182,357（45）

Increase (decrease) in reserve for losses on refund of interest

Net decrease (increase) in loans and bills discounted

Disposal of treasury stock

Retained earnings

Increase (decrease) in reserve for reimbursement of deposits−（3,041）

29,727

（86）

2,048

−

Purchase of treasury stock

Capital surplus−

35

Increase (decrease) in reserve for management board beneﬁt trust

（726）

9,387

10,000（1,021）（31）

Increase (decrease) in directorsʼ retirement beneﬁts

Losses (gains) on revision of retirement beneﬁt plan

（2,521）

Common stock（10,642）

Increase (decrease) in net deﬁned beneﬁt liability

Losses (gains) on disposal of tangible ﬁxed assets

Transfer from retained earnings to capital surplus

Balance at beginning of the year（35）

286,269

Proﬁt attributable to owners of parent

Balance at end of the year

（26）

Accrued interest expenses

Total net
assetsChanges by share transfer

Net changes in items other than shareholdersʼ equity

Increase (decrease) in reserve for bonuses

Accrued interest and dividend income

Changes during the year

Total changes during the year

782

Losses (gains) on securities, net

Accumulated other comprehensive income

Valuation
diﬀerences onavailable-for-salesecurities

7,700

E nv i ronmen t & Gove rnanceTotal changes during the year

93

Increase (decrease) in reserve for possible loan losses

S t ra tegy

497

Transfer from retained earnings to capital surplus（2,521）

601

Loss on impairment

01
St o ry

Fiscal year ended
March 31, 2022

Shareholdersʼ equity
Balance at beginning of the year

(Millions of yen)0（0）（25,319）（118）（25,319）

（118）

（0）

11,332

（2）

2,296

343

（24,960）（25,304）

343（26,569）

12,292

8,044

237,688133（25,304）133（1,333）

Cash dividends paid
Cash dividends paid to non-controlling interests
Purchase of treasury stock
Proceeds from sale of treasury stock
Net cash provided by (used in) ﬁnancing activities
Eﬀect of exchange rate changes on cash and cash equivalents

（221）

（5）

（3,041）（8,081）82（5,700）22

340（10,420）
21

Net increase (decrease) in cash and cash equivalents

139,302（256,712）

Cash and cash equivalents at beginning of the year

1,465,419

1,604,721

Cash and cash equivalents at end of the year

1,604,721

1,348,008127

｜Group Non-Financial Data｜
Environmental
FY2018FY2019FY2020

FY2021

FY2022CO₂ emissions (tons)

6,455

6,148

6,303

5,569

5,245

Electricity consumption (thousand kWh)

10,788

10,286

11,306

10,1509,945

Gasoline consumption (kl)

269

249

206

186

174

Ratio of EV and HV (%)(including MHV)

7.5

8.5

9.3

12.6

13.0

Leases subject to CO₂/energy saving subsidies (number)

37

40

41

59

91

Promotion of ESG initiatives based on the understandingof business prospects (number)

―

ー

ー

1,120

3,506

Social
FY2018FY2019FY2020

FY2021

FY2022

Number of employees

1,782

1,750

1,741

1,890

1,880

Number of male employees

1,065

1,012

991

1,029

996

Number of female employees

717

738

750

861

884

Ratio of female employees (%)

40.2

42.2

43.1

45.6

47.0

Age composition
0 to 14 years old (%)

0.0

0.0

0.0

0.0

0.0

15 to 30 years old (%)

23.0

23.0

22.5

19.6

18.3

31 to 40 years old (%)

25.6

27.0

28.8

29.8

29.9

41 to 50 years old (%)

31.1

29.7

27.3

25.4

24.0

51 years or older (%)

20.3

20.3

21.5

25.1

27.8

41 years 1 month

41 years 1 month

41 years 3 months

42 years 4 months

42 years 2 months

Average age
Male

43 years 4 months

43 years 4 months

43 years 4 months

44 years 4 months

43 years 9 months

Female37 years 10 months

37 years 11 months

38 years 6 months

39 years 6 months

40 years 6 months

Average length of service

17 years 2 months

17 years 2 months

17 years 4 months

16 years 9 months

15 years 9 months

Male

19 years 9 months

19 years 11 months

20 years 0 month

19 years 1 month

17 years 11 months

Female13 years 5 months

13 years 6 months

13 years 9 months

13 years 11 months

13 years 3 months

Women in management positions (%)

11.7

13.9

14.6

17.6

20.3

Employees with disabilities (%)

2.48

2.34

2.79

2.66

2.86

Number of users of internet banking forcorporate customers (month)

16,85017,49918,15021,10323,751

Utilization rate

86.34%

85.03%

84.57%

84.27%

84.44%

Number of users of internet banking forindividual customers (month)

34,006

47,691

68,345

104,360

134,858

Utilization rate

19.97%

39.89%

43.27%

49.45%

50.30%

Governance
FY2018FY2019FY2020

FY2021

FY2022

Number of directors (＊)

17

17

15

10

9

Outside directors (%)(＊)

23.5

29.4

33.3

50

55

Female directors (%)(＊)

5

11

13

10

22

22.0

20.0

18.1

13.8

11.4

Strategic shareholdings balance (¥ bn)＊Listed shares held by Hokkoku Bank (book value)(＊) Data through FY2020 are those of Hokkoku Bank.

Hokkoku Financial Holdings has published its integrated report for 2023.
In editing the report, we have referred to the International Integrated Reporting Framework
advocated by the International Integrated Reporting Council (IIRC) and the Guidance forIntegrated Corporate Disclosure and Company‒Investor Dialogues for Collaborative Value
Creation issued by the Ministry of Economy, Trade and Industry, among other materials.
Although this integrated report contains forward-looking statements regarding the Companyʼsfuture performance, these statements are not guarantees of future performance and may
diﬀer from actual results due to changes in the business environment, among other factors.

128